485APOS 1 b52162nke485apos.txt THE HARTFORD MUTUAL FUNDS, INC. As filed with the Securities and Exchange Commission on October 15, 2004 File No. 333-02381/811-07589 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM N-1A REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /X/ Pre-Effective Amendment No. / / Post-Effective Amendment No. 36 /X/ and/or REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /X/ Amendment No. 38 /X/ THE HARTFORD MUTUAL FUNDS, INC. (Exact Name of Registrant as Specified in Charter) P. O. Box 2999, Hartford, Connecticut 06104-2999 (Address of Principal Executive Offices) Registrant's Telephone Number including Area Code: (860) 843-4586 Kevin J. Carr, Esquire The Hartford Financial Services Group, Inc. Life Law - Mutual Funds Unit 200 Hopmeadow Street Simsbury, Connecticut 06089 (Name and Address of Agent for Service) Copy to: John V. O'Hanlon, Esquire Dechert LLP 200 Clarendon Street, 27th Floor Boston, Massachusetts 02116-5021 It is proposed that this filing will become effective (check appropriate box): ___ immediately upon filing pursuant to paragraph (b) of Rule 485 ___ on (Date) pursuant to paragraph (b) of Rule 485 ___ 60 days after filing pursuant to paragraph (a)(1) of Rule 485 ___ on (Date) pursuant to paragraph (a)(1) of Rule 485 ___ 75 days after filing pursuant to paragraph (a)(2) of Rule 485 X on January 1, 2005 pursuant to paragraph (a)(2) of Rule 485 If appropriate, check the following box: This post-effective amendment designates a new effective date for a previously filed ___ post-effective amendment. This post-effective amendment contains the prospectuses and statement of additional information relating to The Hartford Select MidCap Growth Fund, a new series of the registrant established by the Directors of the registrant at a meeting on July 28, 2004 (the "Fund"). The post-effective amendment contains two prospectuses (one applicable to Class A, Class B and Class C Shares and one applicable to Class Y Shares) and one statement of additional information (applicable to Class A, Class B, Class C and Class Y Shares) for the Fund. The registrant currently has thirty-five other series of shares each registered under the Securities Act of 1933 which are offered through other prospectuses and another statement of additional information not included in this post-effective amendment. This post-effective amendment is not intended to update or amend such other prospectuses or statement of additional information. THE HARTFORD MUTUAL FUNDS CLASS A, CLASS B AND CLASS C SHARES PROSPECTUS JANUARY __, 2005 AS WITH ALL MUTUAL FUNDS, THE HARTFORD SELECT MIDCAP GROWTH FUND THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE HARTFORD MUTUAL FUNDS P.O. BOX 64387 ST. PAUL, MN 55164-0387 [THIS PAGE IS INTENTIONALLY LEFT BLANK] CONTENTS
Introduction Introduction A summary of the fund's goals, principal The Hartford Select MidCap Growth Fund strategies, main risks, performance and expenses Description of other investment strategies and Investment strategies and investment matters investment risks Investment manager and management fee Management of the fund information Information on your account About your account Choosing a share class How sales charges are calculated Sales charge reductions and waivers Opening an account Buying shares Selling shares Transaction policies Dividends and account policies Additional investor services Further information on the fund Financial highlights Privacy policy For more information back cover
THE HARTFORD MUTUAL FUNDS INTRODUCTION This prospectus relates to the Class A, B and C shares of The Hartford Select MidCap Growth Fund (the "fund") and describes the fund's investment strategy and risk/reward profile. The fund is a diversified open-end fund and a series of The Hartford Mutual Funds, Inc. Information on the fund, including risk factors, can be found on the pages following this introduction. The investment manager to the fund is Hartford Investment Financial Services, LLC ("HIFSCO"). As the investment manager, HIFSCO is responsible for the management of the fund and supervision of the fund's investment sub-advisers. The day-to-day portfolio management of the fund is provided by three investment sub-advisers, each of whom manages a portion of the fund: Chartwell Investment Partners, Goldman Sachs Asset Management, L.P. and Northern Capital Management, LLC. Information regarding HIFSCO and each sub-adviser is included under the section entitled "Management of the Fund" in this prospectus. Mutual funds are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Because you could lose money by investing in this fund, be sure to read all risk disclosures carefully before investing. THE HARTFORD MUTUAL FUNDS 1 THE HARTFORD SELECT MIDCAP GROWTH FUND INVESTMENT GOAL. The Hartford Select MidCap Growth Fund seeks long-term capital appreciation. PRINCIPAL INVESTMENT STRATEGY. The fund seeks to achieve its goal by investing primarily in growth style stocks. Under normal circumstances, the fund invests at least 80% of its assets in common stocks of mid-capitalization companies. The fund defines mid-capitalization companies as companies with market capitalizations within the range of companies in the Russell Midcap Growth Index. As of ____________, 2004, the market capitalization of companies included in this index currently ranges from approximately $500 million to $13 billion. The fund may invest up to 20% of its total assets in securities of foreign issuers and non-dollar securities. The fund employs a "multi-manager" approach whereby portions of the fund's cash flows are allocated among different money managers who employ distinct investment styles intended to complement one another. HIFSCO serves as the investment adviser to the fund and is responsible for the oversight of the sub-advisers. HIFSCO has selected three different asset managers to manage the fund: Chartwell Investment Partners, Goldman Sachs Asset Management, L.P. and Northern Capital Management, LLC. Each sub-adviser acts independently of the others and uses its own methodology for selecting investments. Chartwell Investment Partners' ("Chartwell") mid-cap strategy focuses on finding companies that demonstrate strong increases in earnings per share. The portfolio managers and analysts search for three key elements in each targeted investment: secular and sustainable growth in the total enterprise, sound economic foundation, and proven management expertise. In addition, the investment team concentrates on identifying a stable operating environment as perceived through superior business practices, predictable regulatory environments and conservative accounting practices. The team of managers and analysts rely on both proprietary and non-proprietary sources of information for the investment decisions, including direct company contacts, unbiased primary information sources, such as suppliers and customers, as well as Wall Street research for basic company and industry information. Individual securities are evaluated using conservative valuation parameters, measured against their historical levels and relative to a peer universe. Among the valuation metrics utilized are price to earnings, earnings growth rates, ratio of price to earnings to growth, price to cash flow, return on equity, return on assets, return on investments, as well as quarterly earnings expectations and results. In constructing portfolios of sound investments, Chartwell utilizes a continuous process of fundamental research, evaluation, portfolio construction and monitoring. The investment universe comprises 800 securities ranging in market capitalization between $1.5 billion and $10 billion with a median of approximately $3 billion. The portfolio managers initiate investment ideas opportunistically, when securities are attractively valued, yet concentrate holdings in companies best positioned for rapid growth. The portfolio typically comprises 50-60 names. Chartwell's mid-cap growth investment style lies between growth at a reasonable price and momentum investing. Goldman Sachs Asset Management, L.P. ("GSAM") employs a bottom-up investment process that seeks to identify high quality growth companies whose stock price will appreciate as a result of the above average growth in the underlying business. GSAM invests as if it were acquiring the business, rather than investing in the stock. Therefore, analysts spend considerable time evaluating the drivers of long-term growth and profitability for each company. The investment team conducts fundamental analysis of industry and company financials to determine the real worth of the business. In an effort to buy businesses poised for long-term growth, the research team focuses on companies with strong business franchises, favorable long-term prospects and exceptional management. In addition, analysts evaluate the strategic long-term growth capabilities of a business rather than short-term factors. The end result is a portfolio of high quality growth companies with relatively low turnover. The investment process begins with a universe of companies with market capitalizations ranging from $500 million to $13 billion. Investment ideas originate from internal investment group meetings, periodicals or through discussions with other companies under coverage. Companies are evaluated based on numerous investment criteria, namely dominant market shares, established brand names, pricing power, recurring revenue streams, free cash flow, high returns on invested capital, predictable and sustainable growth, long product life cycles, enduring competitive advantage, favorable demographics and excellent management. If the company meets the investment criteria, analysts create a financial model based on the balance sheet, income and cash flow statements and also calculate the company's total enterprise value. Analysts will also meet with management, competitors, customers and suppliers to assess the company's long-term fundamentals, business plan and current and future challenges. The portfolio ultimately consists of approximately 60-80 securities with a median market capitalization of $3 billion to $4 billion. Analysts concentrate on growth companies whose intrinsic business value is attractive relative to its stock price and is expected to increase over time. The expectation is that investing in a growth company at a discount provides a margin of safety and a potential for incremental return to the portfolio as the gap between the stock price and intrinsic value contracts. This is also a key component of GSAM's ability to manage risk over the long term. As it relates to risk management, GSAM employs a number of policies and procedures in portfolio construction, which include monitoring of sector, industry and stock exposures, and utilizes a variety of portfolio construction analysis tools. THE HARTFORD MUTUAL FUNDS 2 THE HARTFORD SELECT MIDCAP GROWTH FUND Northern Capital Management, LLC's ("Northern Capital") mid-cap growth process focuses on bottom-up fundamental research to identify and select growth companies that have significant return potential. The securities in the portfolio can be commonly characterized as growth companies that are market leaders with strong competitive positions. The investment team combines traditional fundamental research with competitive analysis to rank securities based on the level and sustainability of their earnings growth. The team then constructs the portfolio by purchasing securities where the market price does not fully reflect the company's underlying growth prospects. This disciplined process is intended to produce long-term results that exceed the returns of the overall market over a full market cycle. The mid-cap coverage universe initially comprises some 350 companies based on the following criteria: market capitalizations generally between $1 billion to $12 billion, historical earnings per share growth faster than the market, leaders within their respective industries and strong competitive position. Investment analysts construct proprietary earnings models and competitive advantage rankings based on information gathered from various company and industry sources. Analysts' growth assumptions and competitive advantage rankings are also used to develop terminal price/earnings models that reflect analysts' assumptions about the sustainability of each company's long-term earnings. The portfolio is constructed from 50-65 of the most attractive stocks (with a median market capitalization below $5 billion) based on expected returns and consistent with industry diversification constraints. MAIN RISKS. As with most stock funds, the value of your investment may go down in response to overall stock market movements and trends. Because the fund invests in mid-sized companies, its performance may be more volatile than that of a fund that invests primarily in larger companies. Stocks of mid-sized companies may be more risky than stocks of larger companies. These companies may be young and have more limited operating or business history. Because these businesses frequently rely on narrower product lines and niche markets, they can suffer from isolated business setbacks. Mid-sized company stocks as a group could fall out of favor with the market, causing the fund to underperform funds that focus on other types of stocks. You could lose money as a result of your investment. Foreign investments may be more risky than domestic investments. Investments in securities of foreign issuers and non-dollar securities may be affected by fluctuations in currency exchange rates, incomplete or inaccurate financial information on companies, social upheavals and political actions ranging from tax code changes to governmental collapse. Each sub-adviser's investment strategy will influence performance significantly. If a sub-adviser's stock selection strategy doesn't perform as expected, the fund could underperform its peers or lose money. In addition, if a sub-adviser incorrectly assesses a company's prospects for growth, or if its judgment about how other investors will value the company's growth is wrong, then the price of the company's stock may decrease, or it may not increase to the level that the sub-adviser had anticipated. The investment styles employed by the fund's sub-advisers may not be complementary. The interplay of the various strategies employed by the fund's multiple sub-advisers may result in the fund holding a concentration of certain types of securities. This concentration may be beneficial or detrimental to the fund's performance depending upon the performance of those securities and the overall economic environment. The multiple sub-adviser approach could result in a high level of portfolio turnover, resulting in higher fund brokerage expenses and increased tax liability from the fund's realization of capital gains. The fund may trade securities actively, which could increase its transaction costs (thus affecting performance) and may increase your taxable distributions. THE HARTFORD MUTUAL FUNDS 3 THE HARTFORD SELECT MIDCAP GROWTH FUND PAST PERFORMANCE. Because the fund has been in operation for less than one full calendar year, no performance history has been provided. YOUR EXPENSES. This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
CLASS A CLASS B CLASS C ------- ------- ------- SHAREHOLDER FEES (fees paid directly from your investment) Maximum sales charge as a percentage of offering price (load) 5.50% 5.00% 1.00% Maximum load imposed on purchases as a percentage of offering price 5.50% None None Maximum deferred sales charge (load) (as a percentage of purchase price or redemption proceeds, whichever is less) None(1) 5.00%(5) 1.00%(6) Exchange fees None None None ANNUAL OPERATING EXPENSES (expenses that are deducted from the fund's assets) Management fees 0.90% 0.90% 0.90% Distribution and service (12b-1) fees 0.25%(2) 1.00% 1.00% Other expenses (3) ____% ____% ____% Total annual operating expenses (4) ____%(2) ____% ____%
(1) A contingent deferred sales charge of 1.00% may apply on certain redemptions of Class A shares that were purchased without a front-end sales charge. See "About Your Account: How Sales Charges are Calculated." (2) The Rule 12b-1 plan applicable to Class A shares of the fund provides for payment of a Rule 12b-1 fee of up to 0.35%; however, the board of the fund has currently authorized Rule 12b-1 payments of only up to 0.25%. (3) Estimated. (4) HIFSCO has voluntarily agreed to limit the total operating expenses of the Class A, Class B and Class C shares of the fund, exclusive of taxes, interest, brokerage commissions and extraordinary expenses, to ___%, ____% and ____%, respectively. This policy may be discontinued at any time. (5) Imposed on redemptions within 1 year of purchase. This fee is reduced incrementally over a 6 year period. See "About Your Account: How Sales Charges are Calculated." (6) Imposed on redemptions within 1 year of purchase. See "About Your Account: How Sales Charges are Calculated." EXAMPLE. These examples are intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The examples assume that you invest $10,000 in the fund for the time periods indicated. The examples also assume that your investment has a 5% return each year, that the fund's operating expenses remain the same, and that you reinvest all dividends and distributions. Although your actual costs may be higher or lower, based on these assumptions your costs would be: THE HARTFORD MUTUAL FUNDS 4 THE HARTFORD SELECT MIDCAP GROWTH FUND You would pay the following expenses if you redeemed your shares at the end of each period:
EXPENSES (WITH REDEMPTION) CLASS A CLASS B CLASS C ------- ------- ------- Year 1 $ $ $ Year 3 $ $ $
You would pay the following expenses if you did not redeem your shares:
EXPENSES (WITHOUT REDEMPTION) CLASS A CLASS B CLASS C ------- ------- ------- Year 1 $ $ $ Year 3 $ $ $
THE HARTFORD MUTUAL FUNDS 5 INVESTMENT STRATEGIES AND INVESTMENT MATTERS INVESTMENT RISKS GENERALLY There is no assurance that the fund will achieve its investment goal (investment objective), and investors should not consider any one fund alone to be a complete investment program. As with all mutual funds, there is a risk that an investor could lose money by investing in the fund. The different types of securities, investments, and investment techniques used by the fund all have attendant risks of varying degrees. For example, with respect to equity securities, in which the fund may invest as part of its principal investment strategy, there can be no assurance of capital appreciation and an investment in any stock is subject to, among other risks, the risk that the stock market as a whole may decline, thereby depressing the stock's price (market risk), or the risk that the price of a particular issuer's stock may decline due to its financial results (financial risk). With respect to debt securities, there exists, among other risks, the risk that the issuer of a security may not be able to meet its obligations on interest or principal payments at the time required by the instrument (credit risk, a type of financial risk). In addition, the value of debt instruments and other income-bearing securities generally rises and falls inversely with prevailing current interest rates (interest rate risk, a type of market risk). Securities issued by U.S. Government agencies or government-sponsored enterprises may not be guaranteed by the U.S. Treasury. As described below, an investment in the fund entails special additional risks. USE OF MONEY MARKET INVESTMENTS FOR TEMPORARY DEFENSIVE PURPOSES From time to time, as part of its principal investment strategy, the fund may invest some or all of its assets in high quality money market securities for temporary defensive purposes in response to adverse market, economic or political conditions. To the extent the fund is in a defensive position, the fund may lose the benefit of upswings and limit its ability to meet its investment objective. USE OF OPTIONS, FUTURES AND OTHER DERIVATIVES Although not a principal investment strategy, the fund may purchase and sell options, enter into futures contracts and/or utilize other derivative contracts and securities with respect to stocks, bonds, groups of securities (such as financial indices), foreign currencies or interest rates. These techniques, which are incidental to the fund's primary strategy, permit the fund to gain exposure to a particular security, group of securities, interest rate or index, and thereby have the potential for the fund to earn returns that are similar to those which would be earned by direct investments in those securities or instruments. These techniques are also used to manage risk by hedging the fund's portfolio investments. Hedging techniques may not always be available to the fund, and it may not always be feasible for the fund to use hedging techniques even when they are available. Derivatives have risks, however. If the issuer of the derivative instrument does not pay the amount due, the fund could lose money on the instrument. In addition, the underlying security or investment on which the derivative is based, or the derivative itself, may not perform the way the manager expected. As a result, the use of these techniques may result in losses to the fund or increase volatility in the fund's performance. Some derivatives are sophisticated instruments that typically involve a small investment of cash relative to the magnitude of risks assumed. Derivative securities are subject to market risk, which could be significant for those that have a leveraging effect. FOREIGN INVESTMENTS The fund may invest in securities of foreign issuers and non-dollar securities as part of its principal investment strategy. Investments in the securities of foreign issuers or investments in non-dollar securities involve significant risks that are not typically associated with investing in U.S. dollar-denominated securities or securities of domestic issuers. Such investments may be affected by changes in currency rates, changes in foreign or U.S. laws or restrictions applicable to such investments and in exchange control regulations. Some foreign stock markets (and other securities markets) may have substantially less volume than, for example, the New York Stock Exchange (or other domestic markets) and securities of some foreign issuers may be less liquid than securities of comparable domestic issuers. Commissions and dealer mark-ups on transactions in foreign investments may be higher than for similar transactions in the United States. In addition, clearance and settlement procedures may be different in foreign countries and, in certain markets, on certain occasions, such procedures have been unable to keep pace with the volume of securities transactions, thus making it difficult to execute such transactions. The inability of the fund to make intended investments due to settlement problems could cause THE HARTFORD MUTUAL FUNDS 6 INVESTMENT STRATEGIES AND INVESTMENT MATTERS it to miss attractive investment opportunities. Inability to dispose of portfolio securities or other investments due to settlement problems could result either in losses to the fund due to subsequent declines in value of the portfolio investment or, if the fund has entered into a contract to sell the investment, could result in possible liability to the purchaser. Foreign issuers are not generally subject to uniform accounting, auditing and financial reporting standards comparable to those applicable to domestic companies, and there may be less publicly available information about a foreign issuer than about a domestic one. In addition, there is generally less government regulation of stock exchanges, brokers, and listed and unlisted issuers in foreign countries than in the United States. Furthermore, with respect to certain foreign countries, there is a possibility of expropriation or confiscatory taxation, imposition of withholding taxes on dividend or interest payments, limitations on the removal of cash or other assets of the fund, or political or social instability or diplomatic developments which could affect investments in those countries. Individual foreign economies also may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position. INVESTMENTS IN EMERGING MARKETS The Fund may invest in emerging markets, but not as part of its principal investment strategy. The securities markets of Asian, Latin American, Eastern European, African and other emerging countries are less liquid, are especially subject to greater price volatility, have smaller market capitalizations, have less government regulation and are not subject to as extensive and frequent accounting, financial and other reporting requirements as the securities markets of more developed countries. Further, investment in equity securities of issuers located in Russia and certain other emerging countries involves risk of loss resulting from problems in share registration and custody and substantial economic and political disruptions. The fund may also utilize derivative instruments, such as equity linked securities, to gain exposure to certain emerging markets, but not as a principal investment strategy. These risks are not normally associated with investments in more developed countries. SMALL CAPITALIZATION COMPANIES The fund may invest in securities of small capitalization companies, but not as part of its principal investment strategy. Historically, small market capitalization stocks and stocks of recently organized companies have been more volatile in price than the larger market capitalization stocks often included in the S&P 500 Index. As a result, investing in the securities of such companies involves greater risk and the possibility of greater portfolio price volatility. Among the reasons for the greater price volatility of these small company and unseasoned stocks are the less certain growth prospects of smaller firms and the lower degree of liquidity in the markets for such stocks. Small company stocks are frequently thinly traded and may have to be sold at a discount from current market prices or sold in small lots over an extended period of time. Small companies also often have limited product lines, markets or financial resources, may depend on or use a few key personnel for management, and may be susceptible to losses and risks of bankruptcy. The transaction costs associated with small company stocks are often higher than those of larger capitalization companies. OTHER INVESTMENT COMPANIES The fund is permitted to invest in other investment companies, including investment companies which may not be registered under the Investment Company Act of 1940, as amended (the "1940 Act"), such as holding company depository receipts (HOLDRs), but not as part of its principal investment strategy. Securities in certain countries are currently accessible to the fund only through such investments. The investment in other investment companies is limited in amount by the 1940 Act, and will involve the indirect payment of a portion of the expenses, including advisory fees, of such other investment companies. The fund's investments in investment companies may include various exchange-traded funds ("ETFs"), subject to the fund's investment objective, policies, and strategies as described in the prospectus. ETFs are baskets of securities that, like stocks, trade on exchanges such as the American Stock Exchange and the New York Stock Exchange. ETFs are priced continuously and trade throughout the day. ETFs may track a securities index, a particular market sector, or a particular segment of a securities index or market sector. Some types of equity ETFs are: - "SPDRs" (S&P's Depositary Receipts), which are securities that represent ownership in a long-term unit investment trust that holds a portfolio of common stocks designed to track the performance of an S&P Index. Holders of SPDRs are entitled to THE HARTFORD MUTUAL FUNDS 7 INVESTMENT STRATEGIES AND INVESTMENT MATTERS receive proportionate quarterly cash distributions corresponding to the dividends that accrue to the stocks in the S&P Index's underlying investment portfolio, less any trust expenses. - "Qubes" (QQQ), which invest in the stocks of the Nasdaq 100 Index, a modified capitalization weighted index that includes the stocks of 100 of the largest and most actively traded non-financial companies listed on the Nasdaq Stock Market. Qubes use a unit investment trust structure that allows immediate reinvestment of dividends. - "iShares," which are securities that represent ownership in a long-term unit investment trust that holds a portfolio of common stocks designed to track the performance of specific indexes. - "HOLDRs" (Holding Company Depositary Receipts), which are trust-issued receipts that represent beneficial ownership in a specified group of 20 or more stocks. Unlike other ETFs, the fund can hold the group of stocks as one asset or unbundle the stocks and trade them separately, according to the fund's investment strategies. ETFs can experience many of the same risks associated with individual stocks. ETFs are subject to market risk where the market as a whole, or that specific sector, may decline. ETFs that invest in volatile stock sectors, such as foreign issuers, smaller companies, or technology, are subject to the additional risks to which those sectors are subject. ETFs may trade at a discount to the aggregate value of the underlying securities. The underlying securities in an ETF may not follow the price movements of an entire industry or sector. Trading in an ETF may be halted if the trading in one or more of the ETF's underlying securities is halted. Although expense ratios for ETFs are generally low, frequent trading of ETFs by the fund can generate brokerage expenses. Generally, the fund will not purchase securities of an investment company if, as a result: (1) more than 10% of the fund's total assets would be invested in securities of other investment companies, (2) such purchase would result in more than 3% of the total outstanding voting securities of any such investment company being held by the fund, or (3) more than 5% of the fund's total assets would be invested in any one such investment company. ABOUT THE FUND'S INVESTMENT GOAL The fund's investment goal (or objective) may be changed without approval of the shareholders of the fund. The fund may not be able to achieve its goal. CONSEQUENCES OF PORTFOLIO TRADING PRACTICES The fund may, at times, engage in short-term trading. Short-term trading could produce higher brokerage expenses and transaction costs for the fund, and therefore could adversely affect the fund's performance. The fund is not managed to achieve a particular tax result for shareholders. Shareholders should consult their own tax adviser for individual tax advice. TERMS USED IN THIS PROSPECTUS EQUITY SECURITIES: Equity securities include common stock, preferred stock, securities convertible into common or preferred stock and warrants or rights to acquire common stock, including options. FOREIGN ISSUERS: Foreign issuers include (1) companies organized outside the United States; (2) foreign governments and agencies or instrumentalities of foreign governments; and (3) issuers whose economic fortunes and risks are primarily linked with markets outside the United States. Certain companies organized outside the United States may not be deemed to be foreign issuers if the issuer's economic fortunes and risks are primarily linked with U.S. markets. NON-DOLLAR SECURITIES: Securities denominated or quoted in foreign currency or paying income in foreign currency. INVESTMENT POLICIES The fund has a name which suggests a focus on a particular type of investment. In accordance with Rule 35d-1 under the 1940 Act, the fund has adopted a policy that it will, under normal circumstances, invest at least 80% of the value of its assets in investments of the type suggested by its name. For purposes of this policy, "assets" means net assets plus the amount of any borrowings for investment THE HARTFORD MUTUAL FUNDS 8 INVESTMENT STRATEGIES AND INVESTMENT MATTERS purposes. In addition, in appropriate circumstances, synthetic investments may be included in the 80% basket if they have economic characteristics similar to the other investments included in the basket. The fund's policy to invest at least 80% of its assets in such a manner is not a "fundamental" one, which means that it may be changed without the vote of a majority of the fund's outstanding shares as defined in the 1940 Act. The name of the fund may be changed at any time by a vote of the fund's board of directors. However, Rule 35d-1 also requires that shareholders be given written notice at least 60 days prior to any change by a fund of its 80% investment policy covered by Rule 35d-1. ADDITIONAL INVESTMENT STRATEGIES AND RISKS The fund may invest in various securities and engage in various investment techniques that are not the principal focus of the fund and therefore are not described in this prospectus. These securities and techniques, together with their risks, are discussed in the fund's Statement of Additional Information ("SAI") which may be obtained free of charge by contacting the fund (see back cover for address and phone number). THE HARTFORD MUTUAL FUNDS 9 MANAGEMENT OF THE FUND THE INVESTMENT MANAGER HIFSCO is the investment manager to the fund. HIFSCO is a wholly-owned indirect subsidiary of The Hartford Financial Services Group, Inc. ("The Hartford"), a Connecticut financial services company with over $_____ billion in assets as of _____________, 2004. At the same time, HIFSCO had over $____ billion in assets under management. HIFSCO is responsible for the management of the fund and supervises the activities of the investment sub-advisers described below. HIFSCO is principally located at 200 Hopmeadow Street, Simsbury, Connecticut 06089. The fund relies on an exemptive order from the Securities and Exchange Commission under which it uses a "Manager of Managers" structure. This permits HIFSCO to appoint a new sub-adviser, with the approval by the Board of Directors and without obtaining approval from those shareholders that participate in the fund. Within 90 days after hiring any new sub-adviser, affected shareholders will receive all information about the new sub-advisory relationship that would have been included if a proxy statement had been required. HIFSCO will not enter into a sub-advisory agreement with an affiliated sub-adviser unless shareholders approve such agreement. THE INVESTMENT SUB-ADVISERS Chartwell Investment Partners ("Chartwell") is an investment sub-adviser to the fund. Founded in 1997, Chartwell is a multi-product equity and fixed income investment adviser. As of ______, 2004, Chartwell managed over $ ____ in assets for over 200 institutional, sub-advisory and private client relationships. Chartwell is principally located at 1235 Westlakes Drive, Suite 400, Berwyn, Pennsylvania 19312. Goldman Sachs Asset Management, L.P. ("GSAM") is an investment sub-adviser to the fund. GSAM has been registered as an investment adviser with the Securities and Exchange Commission since 1990, and is an affiliate of Goldman, Sachs & Co., as a part of its Investment Management Division. As of __________, 2004, GSAM, along with other units of the Investment Management Division of Goldman, Sachs & Co., had assets under management of approximately $________. GSAM is principally located at 32 Old Slip, New York, New York 10005. Northern Capital Management, LLC ("Northern Capital") is an investment sub-adviser to the fund. Northern Capital is a professional investment management firm providing investment advisory services to institutional and individual investors. As of ________, 2004, Northern Capital had investment management authority over $ ______ in assets. Northern Capital is principally located at 8010 Excelsior Drive, Suite 300, Madison, Wisconsin 53717. MANAGEMENT FEES The fund pays a monthly management fee to HIFSCO based on a stated percentage of the fund's average daily net asset value as follows:
AVERAGE DAILY NET ASSETS ANNUAL RATE ------------------------ ----------- First $500 million 0.90% Next $500 million 0.85% Amount over $1 billion 0.80%
Because the fund did not commence operations until January __, 2005, information is not available regarding fees paid by the fund to HIFSCO. PORTFOLIO MANAGERS OF THE FUND The following persons have had primary responsibility for the day-to-day management of the fund since its commencement of operations. THE HARTFORD MUTUAL FUNDS 10 MANAGEMENT OF THE FUND CHARTWELL INVESTMENT PARTNERS The fund is co-managed by Edward N. Antoian and Mark J. Cunneen, with Kevin R. Baker, David Choi, Raymond T. Jackson, Michael D. Jones, and David E. Reidinger as assistant portfolio managers. Edward N. Antoian, Managing Partner and Senior Portfolio Manager at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Antoian joined Chartwell in 1997. From 1984 to 1997, he was a Senior Portfolio Manager at Delaware Investment Advisers, managing institutional assets in small and mid-cap growth styles as well as the Trend and DelCap Funds. Kevin R. Baker, Principal, Senior Portfolio Analyst at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Baker joined Chartwell in 1999. From 1997 to 1999, he was a Consultant to Friess Associates, Inc. for the Jefferies Group, where he analyzed and selected equity investments for the Brandywine Fund as well as individual and institutional clients in mid-cap growth style. David Choi, Portfolio Analyst at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Choi joined Chartwell in 1999. Prior to joining Chartwell, he worked for two years at Daewoo Securities in Seoul, Korea where he was an equity research analyst, entrusted with fundamental and quantitative analysis of South Korean equities. Mark J. Cunneen, Partner and Senior Portfolio Manager at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Cunneen joined Chartwell in 2003. Prior to joining Chartwell, he was a Managing Partner and Portfolio Manager at Churchfield Capital, where he founded and managed long/short equity hedge funds from 2002 to 2003. From 2000 to 2002, Mr. Cunneen was employed by J & W Seligman as a Portfolio Manager and was head of the Small Cap Growth product. Raymond T. Jackson, Portfolio Analyst at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Jackson joined Chartwell in 2001. Prior to joining Chartwell, he was employed as a staff accountant at Cigna Corporation from 2000 to 2001. Michael D. Jones, Partner and Senior Portfolio Manager at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Jones joined Chartwell in 1998. From 1995 to 1998, he was a Portfolio Manager at Pilgrim Baxter and Associates, where he managed over $1 billion in institutional growth equity accounts. David E. Reidinger, Portfolio Manager and Senior Analyst at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Reidinger joined Chartwell in 2004. Prior to joining Chartwell, he was a Portfolio Manager and analyst with Circle T Partners, covering the technology sector from 2003 to 2004. From 2000 to 2003, he was a Vice President and Portfolio Manager with Morgan Stanley Asset Management (Miller Anderson). GOLDMAN SACHS ASSET MANAGEMENT, L.P. The fund is managed by a team of investment professionals led by Co-Chief Investment Officers Herbert E. Ehlers, David G. Shell, Steven M. Barry and Gregory H. Ekizian. Herbert E. Ehlers, Managing Director and Co-Chief Investment Officer at GSAM, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Ehlers joined GSAM as a senior portfolio manager and Chief Investment Officer of the Growth team in 1997. David G. Shell, Managing Director and Co-Chief Investment Officer at GSAM, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Shell joined GSAM as a portfolio manager in 1997. Steven M. Barry, Managing Director and Co-Chief Investment Officer at GSAM, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Barry joined GSAM as a portfolio manager in 1999. From 1988 to 1999, he was a portfolio manager at Alliance Capital Management. Gregory H. Ekizian, Managing Director and Co-Chief Investment Officer at GSAM, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Ekizian joined GSAM as portfolio manager and Co-Chair of the Growth Investment Committee in 1997. THE HARTFORD MUTUAL FUNDS 11 MANAGEMENT OF THE FUND NORTHERN CAPITAL MANAGEMENT, LLC The fund is co-managed by Daniel T. Murphy and Brian A. Hellmer. Daniel T. Murphy, President and Chief Investment Officer of Northern Capital, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Murphy joined Northern Capital in 1995. He heads the investment management group, where he is responsible for all aspects of portfolio management. He is also a member of the firm's Investment Committee, where he participates in the firm's investment strategy and portfolio management decisions, and is co-head of the firm's portfolio management team, where he is responsible for the firm's internal valuation modeling. Mr. Murphy also conducts primary research and stock selection activities for various industry groups. Brian A. Hellmer, Senior Vice President and Director of Research of Northern Capital, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Hellmer joined Northern Capital in 1996. He manages investment analysts and traders, and has portfolio management responsibility for all client accounts. He is also a member of the firm's Investment Committee, where he participates in the firm's investment strategy and portfolio management decisions, and is co-head of the firm's portfolio management team, where he is responsible for the firm's security valuation efforts. THE HARTFORD MUTUAL FUNDS 12 ABOUT YOUR ACCOUNT CHOOSING A SHARE CLASS Each share class has its own cost structure, allowing you to choose the one that best meets your needs. Your financial representative can help you decide. For actual past expenses of each share class, see the fund information earlier in this prospectus. Each class has adopted a Rule 12b-1 plan which allows the class to pay distribution fees for the sale and distribution of its shares and for providing services to shareholders. Because these fees are paid out of a fund's assets on an ongoing basis, over time these fees will increase the cost of your investment and may cost you more than paying other types of sales charges. Generally, it is more advantageous for an investor that is considering an investment in Class B shares of more than $250,000 or an investment in Class C shares of more than $1,000,000 to invest in Class A shares instead. CLASS A - Front-end sales charges, as described under the subheading "How Sales Charges are Calculated". - Distribution and service (12b-1) fees of 0.25%.(1) (1) The Rule 12b-1 plan applicable to Class A shares of the fund provides for payment of a Rule 12b-1 fee of up to 0.35%; however, the board of the fund has currently authorized Rule 12b-1 payments of only up to 0.25%. CLASS B - No front-end sales charge; all your money goes to work for you right away. - Distribution and service (12b-1) fees of 1.00%. - A deferred sales charge, as described on the following page. - Automatic conversion to Class A shares after eight years, thus reducing future annual expenses. CLASS C - No front-end sales charge. - Distribution and service (12b-1) fees of 1.00%. - A 1% contingent deferred sales charge on shares sold within one year of purchase. - No automatic conversion to Class A shares, so annual expenses continue at the Class C level throughout the life of your investment. HOW SALES CHARGES ARE CALCULATED CLASS A sales charges and commissions paid to dealers for the fund are listed below. The offering price includes the front-end sales load.
DEALER AS A % OF AS A % COMMISSION AS OFFERING OF NET PERCENTAGE OF YOUR INVESTMENT PRICE INVESTMENT OFFERING PRICE --------------- --------- ---------- -------------- Less than $50,000 5.50% 5.82% 4.75% $ 50,000 -- $99,999 4.50% 4.71% 4.00% $100,000 -- $249,999 3.50% 3.63% 3.00% $250,000 -- $499,999 2.50% 2.56% 2.00%
THE HARTFORD MUTUAL FUNDS 13 ABOUT YOUR ACCOUNT $500,000 -- $999,999 2.00% 2.04% 1.75% $1 million or more(1) 0% 0% 0%
(1) Investments of $1 million or more in Class A shares may be made with no front-end sales charge. However, there is a contingent deferred sales charge (CDSC) of 1% on any shares sold within 18 months of purchase. For purposes of this CDSC, all purchases made during a calendar month are counted as having been made on the first day of that month. The CDSC is based on the lesser of the original purchase cost or the current market value of the shares being sold and is not charged on shares you acquired by reinvesting your dividends and distributions. To keep your CDSC as low as possible, each time you place a request to sell shares we will first sell any shares in your account that are not subject to a CDSC. The distributor may pay up to the entire amount of the sales commission to particular broker-dealers. The distributor may pay dealers of record commissions on purchases over $1 million an amount of up to 1.00% of the first $4 million, plus 0.50% of the next $6 million, plus 0.25% of share purchases over $10 million. This commission schedule may also apply to certain sales of Class A shares made to investors which qualify under any of the last five categories listed under "Waivers for Certain Investors". CLASS B shares are offered at their net asset value per share, without any initial sales charge. However, you may be charged a contingent deferred sales charge (CDSC) on shares you sell within a certain time after you bought them, as described in the tables below. There is no CDSC on shares acquired through reinvestment of dividends and capital gains distributions. The CDSC is based on the original purchase cost or the current market value of the shares being sold, whichever is less. The CDSCs are as follows:
YEARS AFTER PURCHASE CDSC ----------- ---- 1st year 5.00% 2nd year 4.00% 3rd year 3.00% 4th year 3.00% 5th year 2.00% 6th year 1.00%
CLASS C sales charges are listed below. There is no CDSC on shares acquired through reinvestment of dividends and capital gains distributions. The CDSC is based on the original purchase cost or the current market value of the shares being sold, whichever is less. A front-end sales charge is not assessed on Class C shares:
YEARS AFTER PURCHASE CDSC ----------- ---- 1st year 1.00% After 1 year None
For purposes of Class B and Class C CDSCs, all purchases made during a calendar month are counted as having been made on the first day of that month. To determine whether a CDSC applies, the fund redeems shares in the following order: (1) shares representing an increase over the original purchase cost, (2) shares acquired through reinvestment of dividends and capital gains distributions, (3) Class B shares held for over 6 years or Class C shares held over 1 year, and (4) Class B shares held the longest during the six-year period. When requesting a redemption for a specific dollar amount, please indicate if you require the proceeds to equal the dollar amount requested. If not indicated, only the specified dollar amount will be redeemed from your account and the proceeds will be less any applicable CDSC. Proceeds from the CDSC are paid to the distributor and are used in whole or in part by the fund to defray its expenses related to providing distribution-related services to the fund in connection with the sale of the Class A, Class B and Class C shares, such as the payment of compensation to select selling brokers for selling these classes of shares. The combination of the CDSC and the distribution and service fees facilities the ability of the fund to sell the Class B shares without a sales charge being deducted, and to sell Class A shares with a 4.50% or 5.50% maximum sales charge, as applicable, and Class C shares with a 1% initial sales charge, at the time of the purchase. THE HARTFORD MUTUAL FUNDS 14 ABOUT YOUR ACCOUNT Although the fund does not charge a transaction fee, you may be charged a fee by brokers for the purchase or sale of the fund's shares through that broker. This transaction fee is separate from any sales charge that the fund may apply. [TO BE UPDATED.] SALES CHARGE REDUCTIONS AND WAIVERS REDUCING YOUR CLASS A SALES CHARGES There are several ways you can combine multiple purchases of Class A shares of the fund to take advantage of the breakpoints in the sales charge schedule. The first three ways can be combined in any manner: - ACCUMULATION PRIVILEGE -- lets you add the value of any shares of the Hartford Mutual Funds (including The Hartford Money Market Fund, which, like the other Hartford Mutual Funds not discussed herein, is offered through a separate prospectus) you or members of your family already own to the amount of your next Class A investment for purposes of calculating the sales charge. The Fund offers to all qualifying investors rights of accumulation under which investors are permitted to purchase Class A, Class L and Class E shares of any funds of The Hartford Mutual Funds, Inc. and The Hartford Mutual Funds II, Inc. at the price applicable to the total of (a) the dollar amount then being purchased plus (b) an amount equal to the then current net asset value of the purchaser's holdings of all shares of any funds of The Hartford Mutual Funds, Inc. and The Hartford Mutual Funds II, Inc. For purposes of the rights of accumulation program, the purchaser may include all shares owned by family members. The definition of family member varies depending upon when the purchaser opened the account. For accounts opened on or after August 16, 2004, a family member is the owner's spouse and any minor children living in the owner's household. For accounts opened before August 16, 2004 for Class A, Class L and Class E shares, a family member is an owner's spouse, parent, grandparent, child, grandchild, brother, sister, step-family members and in-laws. As of August 16, 2004, account values invested in fixed annuity, variable annuity and variable life insurance products will no longer be considered towards the accumulation privilege for Class A shares. Acceptance of the purchase order is subject to confirmation of qualification. The rights of accumulation may be amended or terminated at any time as to subsequent purchases. Hartford Administrative Services Company ("HASCO"), The Hartford Mutual Funds, Inc. and The Hartford Mutual Funds II, Inc.'s transfer agent, must be notified by you or your broker each time a qualifying purchase is made. - LETTER OF INTENT -- lets you purchase Class A shares of the fund over a 13-month period and receive the same sales charge as if all shares had been purchased at once. Any person may qualify for a reduced sales charge on purchases of Class A shares made within a thirteen-month period pursuant to a Letter of Intent ("LOI"). Class A shares acquired through the reinvestment of distributions do not constitute purchases for purposes of the LOI. A Class A shareholder may include, as an accumulation credit towards the completion of such LOI, the value of all shares of any fund of the Company owned by the shareholder. Such value is determined based on the public offering price on the date of the LOI. During the term of an LOI, HASCO will hold shares in escrow to secure payment of the higher sales charge applicable for shares actually purchased if the indicated amount on the LOI is not purchased. Dividends and capital gains will be paid on all escrowed shares and these shares will be released when the amount indicated on the LOI has been purchased. An LOI does not obligate the investor to buy or the Fund to sell the indicated amount of the LOI. If a Class A shareholder exceeds the specified amount of the LOI and reaches an amount which would qualify for a further quantity discount, a retroactive price adjustment will be made at the time of the expiration of the LOI. The resulting difference in offering price will purchase additional Class A shares for the shareholder's account at the applicable offering price. If the specified amount of the LOI is not purchased, the shareholder shall remit to HASCO an amount equal to the difference between the sales charge paid and the sales charge that would have been paid had the aggregate purchases been made at a single time. If the Class A shareholder does not within twenty days after a written request by HASCO pay such difference in sales charge, HASCO will redeem an appropriate number of escrowed shares in order to realize such difference. The LOI may be backdated up to 90 days. Additional information about the terms of the LOI are available from your registered representative or from HASCO at 1-888-843-7824. - COMBINATION PRIVILEGE -- lets you combine Class A shares of multiple Hartford Mutual Funds for purposes of calculating the sales charge. CDSC WAIVERS As long as the transfer agent is notified at the time you sell, the CDSC for each share class will generally be waived in the following cases: - to make Systematic Withdrawal Plan payments that are limited annually to no more than 12% of the value of the account at the time the plan is initiated, THE HARTFORD MUTUAL FUNDS 15 ABOUT YOUR ACCOUNT - because of shareholder death or disability, - because of the death or disability of the grantor of a living trust, - under reorganization, liquidation, merger or acquisition transactions involving other investment companies, - for retirement plans under the following circumstances: (1) to return excess contributions, (2) hardship withdrawals as defined in the plan, (3) under a Qualified Domestic Relations Order as defined in the Internal Revenue Code, (4) to meet minimum distribution requirements under the Internal Revenue Code, (5) to make "substantially equal payments" as described in Section 72(t) of the Internal Revenue Code, and (6) after separation from service. REINSTATEMENT PRIVILEGE If you sell shares of the fund, you may reinvest some or all of the proceeds in the same share class of any of the Hartford Mutual Funds within 180 days without a sales charge, as long as the transfer agent is notified before you invest. If you paid a CDSC when you sold your shares, you will be credited with the amount of the CDSC. All accounts involved must have the same registration. WAIVERS FOR CERTAIN INVESTORS Class A shares may be offered without front-end sales charges to the following individuals and institutions: - selling brokers and their employees and sales representatives, - financial representatives utilizing fund shares in fee-based investment products under a signed agreement with the fund, - present or former officers, directors and employees (and their families) of the fund, The Hartford, the transfer agent, and their affiliates, - retirement or welfare benefit plans investing in fund shares through group variable funding agreements issued by Hartford Life Insurance Company, - participants in certain retirement plans with at least 100 participants or $500,000 in plan assets, - participants in retirement plans where Hartford Life Insurance Company or an affiliate is the plan administrator, - one or more members of a group (including spouses and dependent children) of at least 100 persons engaged, or previously engaged in a common business, profession, civic or charitable endeavor or other activity (1% CDSC applies if redeemed within 18 months). The 1% CDSC indicated above also may be waived where the distributor does not compensate the broker for the sale. ADDITIONAL COMPENSATION TO BROKER-DEALERS, FINANCIAL INSTITUTIONS AND OTHER PERSONS ("FINANCIAL INTERMEDIARIES") In addition to the commissions (which may be paid or reallowed to Financial Intermediaries from an applicable sales charge and/or advanced to Financial Intermediaries) and Rule 12b-1 fees described above and in the SAI, the distributor and its affiliates pay, out of their own assets, significant additional compensation to Financial Intermediaries (who may or may not be affiliates of the distributor) in connection with the sale and distribution of the fund's shares ("Additional Payments") based on a number of factors described in the fund's SAI. This additional compensation is not paid directly by you. THE HARTFORD MUTUAL FUNDS 16 ABOUT YOUR ACCOUNT With the exception of certain compensation arrangements specifically discussed in the SAI and "Negotiated Additional Amounts" defined below, these Additional Payments, which are generally based on average net assets (or on aged assets) of the fund attributable to a particular Financial Intermediary, on sales of the fund's shares attributable to a particular Financial Intermediary, and/or on reimbursement of ticket charges, may, but are normally not expected to, exceed, in the aggregate, 0.40% of the average net assets of the fund attributable to a particular Financial Intermediary. Please refer to the SAI for a listing of Financial Intermediaries to whom the distributor makes such Additional Payments. Separate Additional Payments may also be made in connection with the sale and distribution of the fund's shares in such forms as, among others, "due diligence" payments and "marketing support" fees ("Negotiated Additional Amounts"), as discussed in greater detail in the SAI. These Negotiated Additional Amounts paid to Financial Intermediaries in connection with the sale and distribution of the fund's shares may also pertain to the sale and distribution of other investment products distributed by affiliates of the distributor. Because the fund will not have commenced operations until January __, 2005, there is no information regarding Additional Payments, including Negotiated Additional Amounts, paid by the distributor or its affiliates to Financial Intermediaries. OPENING AN ACCOUNT IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: when you open an account, you will be asked to provide your name, address, date of birth, social security number and other information that identifies you. You may also be asked to show your driver's license or other identifying documents. The information you provide may also be validated through various public databases. If the fund is not able to adequately identify you within the timeframes set forth in the law, your shares may be automatically redeemed. If the net asset value per share has decreased since your purchase, you will lose money as a result of this redemption. You may also incur any applicable sales charge. NOTE FOR RETIREMENT PLAN PARTICIPANTS AND INVESTORS WHOSE SHARES ARE HELD BY FINANCIAL REPRESENTATIVES: If you hold your shares through a retirement plan or if your shares are held with a financial representative you will need to make transactions through the retirement plan administrator or your financial representative. Some of the services and programs described in this prospectus may not be available or may differ in such circumstances. In addition, the fund offered in this prospectus may not be available in your retirement plan. You should check with your retirement plan administrator or financial representative for further details. 1 Read this prospectus carefully. 2 Determine how much you want to invest. The minimum initial investment for the fund is as follows: - non-retirement accounts: $1,000 - retirement accounts: $1,000 - Automatic Investment Plans: $50 to open; you must invest at least $50 in the fund per month - subsequent investments: $50 Minimum investment amounts may be waived for certain retirement accounts including IRAs and present or former officers, directors and employees and their families of The Hartford, and their affiliates, as well as for certain broker sponsored wrap-fee programs. 3 Complete the appropriate parts of the account application including any privileges desired. By applying for privileges now, you can avoid the delay and inconvenience of having to file an additional application if you want to add privileges later. If you have questions and you hold the shares through a financial representative or retirement plan, please contact your financial representative or plan administrator. If you hold the shares directly with the fund, please call the transfer agent at the number shown below. 4 Make your initial investment selection. You, your financial representative or plan administrator can initiate any purchase, exchange or sale of shares. THE HARTFORD MUTUAL FUNDS 17 ABOUT YOUR ACCOUNT ADDRESS: PHONE NUMBER: THE HARTFORD MUTUAL FUNDS 1-888-843-7824 P.O. BOX 64387 ST.PAUL, MN 55164-0387 OR CONTACT YOUR FINANCIAL REPRESENTATIVE OR PLAN ADMINISTRATOR FOR INSTRUCTIONS AND ASSISTANCE. THE HARTFORD MUTUAL FUNDS 18 BUYING SHARES
OPENING AN ACCOUNT ADDING TO AN ACCOUNT ------------------ -------------------- BY CHECK - Make out a check for the investment amount, - Make out a check for the investment amount, payable to (CHECK payable to "The Hartford Mutual Funds". "The Hartford Mutual Funds". GRAPHIC) - Deliver the check and your completed application to - Fill out the detachable investment slip from an your financial representative, plan administrator or account statement If no slip is available, include mail to the address listed below. a note specifying the fund name, your share class, your account number and the name(s) in which the account is registered. - Deliver the check and your investment slip or note to your financial representative, plan administrator or mail to the address listed below. BY EXCHANGE (ARROW - Call your financial representative, plan - Call your financial representative, plan GRAPHIC) administrator or the transfer agent at the number administrator or the transfer agent at the number below to request an exchange. The minimum exchange below to request an exchange. The minimum exchange amount is $500. amount is $500. BY WIRE - Deliver your completed application to your financial - Instruct your bank to wire the amount of your (WIRE representative, or mail it to the address below. investment to: GRAPHIC) U.S. Bank National Association - Obtain your account number by calling your ABA #091000022, credit account no: financial representative or the phone number below. 1-702-2514-1341 The Hartford Mutual Funds Purchase Account - Instruct your bank to wire the amount of your For further credit to: (your name) investment to: Hartford Mutual Funds Account Number: U.S. Bank National Association (your account number) ABA #091000022, credit account no: Specify the fund name, your share class, your account 1-702-2514-1341 number and the name(s) in which the account is The Hartford Mutual Funds Purchase Account registered. Your bank may charge a fee to wire funds. For further credit to: (your name) Hartford Mutual Funds Account Number: (your account number) Specify the fund name, your choice of share class, the new account number and the name(s) in which the account is registered. Your bank may charge a fee to wire funds. BY PHONE - See "By Wire" and "By Exchange" - Verify that your bank or credit union is a member of the (PHONE Automated Clearing House (ACH) system. GRAPHIC) - Complete the "Telephone Exchanges and Telephone Redemption" and "Bank Account or Credit Union Information" sections on your account application. - Call the transfer agent at the number below to verify that these features are in place on your account. - Tell the transfer agent representative the fund name, your share class, your account number, the name(s) in which the account is registered and the amount of your investment.
To open or add to an account using the Automatic Investment Plan, see "Additional Investor Services". ADDRESS: PHONE NUMBER: THE HARTFORD MUTUAL FUNDS 1-888-843-7824 P.O. BOX 64387 ST.PAUL, MN 55164-0387 OR CONTACT YOUR FINANCIAL REPRESENTATIVE OR PLAN ADMINISTRATOR FOR INSTRUCTIONS AND ASSISTANCE. THE HARTFORD MUTUAL FUNDS 19 SELLING SHARES BY LETTER - Write a letter of instruction or complete a power of attorney indicating the fund name, your share class, your account number, the name(s) in which the account is registered and the dollar value or number of shares you wish to sell. (LETTER - Include all signatures and any additional documents that GRAPHIC) may be required (see next page). - Mail the materials to the address below or to your plan administrator. - A check will be mailed to the name(s) and address in which the account is registered, or otherwise according to your letter of instruction. Overnight delivery may be requested for a nominal fee (currently $10) which will be deducted from redemption proceeds. BY PHONE (PHONE - Restricted to sales of up to $50,000 in any 7-day GRAPHIC) period. - To place your order with a representative, call the transfer agent at the number below between 8 A.M. and 7 P.M. Eastern Time (between 7 A.M. and 6 P.M. Central Time) Monday through Thursday and between 8 A.M. and 6 P.M. Eastern Time (between 7 A.M. and 5 P.M. Central Time) on Friday. Orders received after 4 P.M. Eastern Time (3 P.M. Central Time) will receive the next business day's offering price. - For automated service 24 hours a day using your touch-tone phone, call the number below. BY WIRE OR ELECTRONIC FUNDS TRANSFER (EFT) (COMPUTER - Fill out the "Telephone Exchanges and Telephone GRAPHIC) Redemption" and "Bank Account or Credit Union Information" sections of your new account application. - Call the transfer agent to verify that the telephone redemption privilege is in place on an account, or to request the forms to add it to an existing account. - Generally, amounts of $1,000 or more will be wired on the next business day. Your bank may charge a fee for this service. - Amounts of less than $1,000 may be sent by EFT or by check. Funds from EFT transactions are generally available by the second business day. Your bank may charge a fee for this service. - Phone requests are limited to amounts up to $50,000 in a 7-day period. BY EXCHANGE (ARROW - Obtain a current prospectus for the fund into which you GRAPHIC) are exchanging by calling your financial representative or the transfer agent at the number below. - Call your financial representative or the transfer agent to request an exchange. To sell shares through a systematic withdrawal plan, see "Additional Investor Services". ADDRESS: PHONE NUMBER: THE HARTFORD MUTUAL FUNDS 1-888-843-7824 P.O. BOX 64387 ST.PAUL, MN 55164-0387 OR CONTACT YOUR FINANCIAL REPRESENTATIVE OR PLAN ADMINISTRATOR FOR INSTRUCTIONS AND ASSISTANCE. THE HARTFORD MUTUAL FUNDS 20 SELLING SHARES IN WRITING BY LETTER In certain circumstances, you will need to make your request to sell shares in writing. You may need to include additional items with your request, as shown in the table below. You may also need to include a signature guarantee, which protects you against fraudulent orders. You will need a signature guarantee if: - your address of record has changed within the past 30 days (LETTER GRAPHIC) - you are selling more than $50,000 worth of shares - you are requesting payment other than by a check mailed to the address of record and payable to the registered owner(s) Please note that a notary public CANNOT provide a signature guarantee. Please check with a representative of your bank or other financial institution about obtaining a signature guarantee. REQUIREMENTS FOR WRITTEN REQUESTS BY SELLER OWNERS OF INDIVIDUAL, JOINT, SOLE PROPRIETORSHIP, UGMA/UTMA (CUSTODIAL ACCOUNTS FOR MINORS) OR GENERAL PARTNER ACCOUNTS. - Letter of instruction. - On the letter, the signatures and titles of all persons authorized to sign for the account, exactly as the account is registered. - Signature guarantee if applicable (see above). OWNERS OF CORPORATE OR ASSOCIATION ACCOUNTS. - Letter of instruction. - Corporate resolution, certified within the past twelve months. - On the letter and the resolution, the signature of the person(s) authorized to sign for the account. - Signature guarantee if applicable (see above). OWNERS OR TRUSTEES OF TRUST ACCOUNTS. - Letter of instruction. - On the letter, the signature(s) of the trustee(s). - Provide a copy of the trust document certified within the past twelve months. - Signature guarantee if applicable (see above). JOINT TENANCY SHAREHOLDERS WHOSE CO-TENANTS ARE DECEASED. - Letter of instruction signed by surviving tenant. - Copy of death certificate. - Signature guarantee if applicable (see above). EXECUTORS OF SHAREHOLDER ESTATES. - Letter of instruction signed by executor. - Copy of order appointing executor, certified within the past twelve months. - Signature guarantee if applicable (see above). ADMINISTRATORS, CONSERVATORS, GUARDIANS AND OTHER SELLERS OR ACCOUNT TYPES NOT LISTED ABOVE. - Call 1-888-843-7824 for instructions. ADDRESS: PHONE NUMBER: THE HARTFORD MUTUAL FUNDS 1-888-843-7824 P.O. BOX 64387 ST.PAUL, MN 55164-0387 OR CONTACT YOUR FINANCIAL REPRESENTATIVE OR PLAN ADMINISTRATOR FOR INSTRUCTIONS AND ASSISTANCE. THE HARTFORD MUTUAL FUNDS 21 TRANSACTION POLICIES VALUATION OF SHARES The net asset value per share (NAV) is determined for the fund and each class as of the close of regular trading on the New York Stock Exchange ("NYSE") (typically 4:00 p.m. Eastern Time) on each business day that the NYSE is open. The net asset value is determined by dividing the value of the fund's net assets attributable to a class of shares by the number of shares outstanding for that class. The fund uses market prices in valuing portfolio securities, but may use fair value estimates, as determined under procedures established by the Board of Directors, if reliable market prices are not available. Fair value pricing may be used by the fund when current market values are unavailable or when an event occurs after the close of the exchange on which the fund's portfolio securities are principally traded that is likely to have changed the value of the securities. The use of fair value pricing by the fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated using prevailing market values. Securities of foreign issuers and non-dollar securities are valued on the basis of quotations from the primary market in which they are traded, and are translated from the local currency into U.S. dollars using prevailing exchange rates. Debt securities (other than short-term obligations) held by the fund are valued on the basis of valuations furnished by an unaffiliated pricing service which determines valuations for normal institutional size trading units of debt securities. Securities for which prices are not available from an independent pricing service, but where an active market exists, are valued using market quotations obtained from one or more dealers that make markets in the securities or from the widely-used quotation system in accordance with procedures established by the Board of Directors. Short term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that will mature in 60 days or less, are valued at amortized cost, which approximates market value. The fund may invest in securities primarily traded in foreign securities markets. Foreign securities markets may trade on days when the fund does not compute its net asset value or may close (generating closing prices) at times before or after the NYSE. Consequently, the net asset value of the fund and the value of its shares may change on days, or at times, when an investor cannot redeem the fund's shares. BUY AND SELL PRICES When you buy shares, you pay the NAV plus any applicable sales charges. When you sell shares, you receive the NAV less any applicable sales charges. EXECUTION OF REQUESTS The fund is open on those days when the New York Stock Exchange is open, typically Monday through Friday. Buy and sell requests are executed at the next NAV to be calculated after your request is received, if your order is complete (has all required information), by the transfer agent or authorized broker-dealers and third-party administrators. At times of peak activity, it may be difficult to place requests by phone. During these times, consider sending your request in writing. In unusual circumstances, the fund may temporarily suspend the processing of sell requests, or may postpone payment of redemption proceeds for up to three business days or longer, as allowed by federal securities laws. REQUESTS IN "GOOD ORDER" All purchase and redemption requests must be received by the fund in "good order". This means that your request must include: - The fund name and account number. - The amount of the transaction (in dollars or shares). - Signatures of all owners exactly as registered on the account (for mail requests). - Signature guarantees (if required). - Any supporting legal documentation that may be required. THE HARTFORD MUTUAL FUNDS 22 TRANSACTION POLICIES TELEPHONE TRANSACTIONS For your protection, telephone requests may be recorded in order to verify their accuracy. Also for your protection, telephone transactions are not permitted on accounts whose names or addresses have changed within the past 30 days. Proceeds from telephone transactions can only be mailed to the address of record. EXCHANGES You may exchange shares of the fund for shares of the same class of any other Hartford Mutual Fund. The registration for both accounts involved must be identical. You may be subject to tax liability or sales charges as a result of your exchange. The fund reserves the right to amend or terminate the exchange privilege at any time, for any reason. RIGHT TO REJECT OR RESTRICT PURCHASE AND EXCHANGE ORDERS The fund does not knowingly permit the frequent trading of fund shares in response to short-term fluctuations in the market, also known as market timing. Do not invest in the fund if you are a market timer. The fund is intended to be a long-term investment vehicle and is not designed to provide investors with a means of speculating on short-term market movements. Because excessive account transactions can disrupt the management of the fund, negatively affect the fund's performance and increase transaction costs for all shareholders, the fund limits account activity as follows: - you may make no more than two substantive exchanges out of the fund in any 90 day period (excluding automatic programs); - the fund may refuse a share purchase at any time, for any reason; - the fund may revoke an investor's exchange privilege at any time, for any reason, and may consider an investor's trading history in any Hartford Mutual Fund, including trading history in other accounts under common ownership and control, in making this determination. "Substantive" means a dollar amount that the fund determines, in its sole discretion, could adversely affect the management of the fund. The fund will use reasonable efforts to detect market timers. However, some investors purchase or sell shares of the fund through financial intermediaries and omnibus accounts that aggregate the orders of several investors and forward the aggregate orders to the fund. Because the fund receives aggregate purchase and sales orders from the financial intermediaries and omnibus accounts, the fund cannot always know or reasonably detect excessive trading by investors that enter orders through these intermediaries or omnibus accounts. [TO BE UPDATED.] CERTIFICATED SHARES Shares are electronically recorded and therefore share certificates are not issued. SMALL ACCOUNTS (NON-RETIREMENT ONLY) If the total value of your account is less than $1,000 (for any reason), you may be asked to purchase more shares within 30 days. If you do not take action within this time, the fund may close out your account and mail you the proceeds. You will not be charged a CDSC if your account is closed for this reason. SALES IN ADVANCE OF PURCHASE PAYMENTS THE HARTFORD MUTUAL FUNDS 23 TRANSACTION POLICIES When you place a request to sell shares for which the purchase money has not yet been collected, the request will be executed in a timely fashion, but the fund will not release the proceeds to you until your purchase payment clears. This may take up to 10 calendar days after the purchase. SPECIAL REDEMPTIONS Although it would not normally do so, the fund has the right to pay the redemption price of shares of the fund in whole or in part in portfolio securities. When the shareholder sells portfolio securities received in this fashion, a brokerage charge would be incurred. Any such securities would be valued for the purposes of making such payment at the same value as used in determining net asset value. The fund, however, always redeems shares solely in cash up to the lesser of $250,000 or 1% of the net asset value of the fund during any 90 day period for any one account. PAYMENT REQUIREMENTS All of your purchases must be made in U.S. dollars and checks must be drawn on U.S. banks and made payable to The Hartford Mutual funds, or in the case of a retirement account, to the custodian or trustee. You may not purchase shares with a third party check. If your check does not clear, your purchase will be canceled and you will be liable for any losses or fees that the fund or HIFSCO has incurred. Certain broker-dealers and financial institutions may enter confirmed purchase orders with the fund on behalf of customers, by phone or other electronic means, with payment to follow within the customary settlement period (generally within three business days). If payment is not received by that time, the order will be canceled and the broker-dealer or financial institution will be held liable for the resulting fees or losses. DIVIDENDS AND ACCOUNT POLICIES ACCOUNT STATEMENTS In general, you will receive account statements as follows: - after every transaction (except certain automatic payment and redemption arrangements and dividend or distribution reinvestment) that affects your account balances - after any changes of name or address of the registered owner(s) - in all other circumstances, every quarter during which there is activity in your account, and at least annually Every year you should also receive, if applicable, a Form 1099-DIV tax information statement. If, however, you are a participant in an employer-sponsored retirement plan or you hold your shares in the name of your broker, you will receive statements from your plan administrator or broker pursuant to their policies. DIVIDENDS AND DISTRIBUTIONS The fund intends to distribute substantially all of its net income and capital gains to shareholders at least once a year. Dividends from net investment income of the fund is normally declared and paid annually. Unless shareholders specify otherwise, all dividends and distributions received from the fund are automatically reinvested in additional full or fractional shares of the fund. If you elect to receive monthly/quarterly dividends in cash, you will only receive a check if the dividend amount exceeds $10. If the dividend is $10 or less, the amount will automatically be reinvested in the fund. If you would like to receive cash dividends, regardless of the amount, you can establish an electronic funds transfer to your bank. Please call the fund for assistance in establishing electronic funds transfer transactions at 1-888-843-7824. TAXABILITY OF DIVIDENDS Dividends and distributions you receive from the fund, whether reinvested or taken as cash, are generally considered taxable. Distributions from the fund's long-term capital gains are taxable as long-term capital gains, regardless of how long you held your shares. Distributions from short-term capital gains and from ordinary income (other than certain qualified dividend income) are generally taxable as ordinary income. A portion of dividends from ordinary income may qualify for the THE HARTFORD MUTUAL FUNDS 24 TRANSACTION POLICIES dividends-received deduction for corporations. Distributions from certain qualified dividend income generally are taxable to individuals at the same rates that apply to long-term capital gains, if certain holding period and other requirements are met. Some dividends paid in January may be taxable as if they had been paid the previous December. The Form 1099 that is mailed to you every January details your dividends and distributions and their federal tax category, although you should verify your tax liability with your tax professional. TAXABILITY OF TRANSACTIONS Unless your shares are held in a qualified retirement account, any time you sell or exchange shares, it is considered a taxable event for you. You may have a capital gain or a loss on the transaction which will be long-term or short-term, depending upon how long you held your shares. You are responsible for any tax liabilities generated by your transactions. The fund may be required to withhold U.S. federal income tax at the rate of 28% of all taxable distributions payable to you if you fail to provide the fund with your correct taxpayer identification number or to make required certifications, or if you have been notified by the IRS that you are subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be credited against your U.S. federal income tax liability. INFLATION-PROTECTED DEBT SECURITIES Periodic adjustments for inflation to the principal amount of an inflation-protected debt security may give rise to original issue discount, which will be includable in the fund's gross income. Due to original issue discount, the fund may be required to make annual distributions to shareholders that exceed the cash received, which may cause the fund to liquidate certain investments when it is not advantageous to do so. Also, if the principal value of an inflation-protected debt security is adjusted downward due to deflation, amounts previously distributed in the taxable year may be characterized in some circumstances as return of capital. Distributions from the fund may also be subject to state, local and foreign taxes. You should consult your own tax adviser regarding the particular tax consequences of an investment in a fund. ADDITIONAL INVESTOR SERVICES ELECTRONIC TRANSFERS THROUGH AUTOMATED CLEARING HOUSE (ACH) allow you to initiate a purchase or redemption for as little as $50 or as much as $50,000 between your bank account and fund account using the ACH network. Sales charges and initial purchase minimums apply. AUTOMATIC INVESTMENT PLAN (AIP) lets you set up regular investments from your paycheck or bank account to the fund. You determine the frequency and amount of your investments, and you can terminate your program at any time. To establish: - Complete the appropriate parts of your account application. - If you are using AIP to open an account, make out a check ($50 minimum) for your first investment amount payable to "The Hartford Mutual Funds." Deliver your check and application to your financial representative or the transfer agent. SYSTEMATIC WITHDRAWAL PLAN may be used for routine bill payments or periodic withdrawals from your account. To establish: - Make sure you have at least $5,000 worth of shares in your account and that the amount per transaction is $50 or more. - Make sure you are not planning to invest more money in this account (buying shares during a period when you are also selling shares of the fund is not advantageous to you, because of sales charges). - SPECIFY THE PAYEE(s). The payee may be yourself or any other party and there is no limit to the number of payees you may have. A signature guarantee is required if the payee is someone other than the registered owner. - Determine the schedule: monthly, quarterly, semi-annually, annually or in certain selected months. - FILL OUT THE RELEVANT PART OF THE ACCOUNT APPLICATION. To add a systematic withdrawal plan to an existing account, contact your financial representative or the transfer agent. THE HARTFORD MUTUAL FUNDS 25 TRANSACTION POLICIES DOLLAR COST AVERAGING PROGRAMS (DCA) let you set up monthly or quarterly exchanges from the fund to the same class of shares of another of the Hartford Mutual Funds. To establish: - Fill out the relevant part of the account application. - Be sure that the amount is for $50 or more. - Be sure that the accounts involved have identical registrations. AUTOMATIC DIVIDEND DIVERSIFICATION (ADD) lets you automatically reinvest dividends and capital gains distributions paid by the fund into the same class of another fund. To establish: - Fill out the relevant portion of the account application. - Be sure that the accounts involved have identical registrations. RETIREMENT PLANS The Hartford Mutual Funds offer a range of retirement plans, including traditional and Roth IRAs, SIMPLE plans, SEPs and 401(k) plans. Using these plans, you can invest in any fund offered by The Hartford Mutual Funds. Minimum investment amounts may apply. To find out more, call 1-888-843-7824. DUPLICATE ACCOUNT STATEMENTS You may request copies of annual account summaries by calling 1-888-843-7824. A $20 fee will be charged for account summaries older than the preceding year. DUPLICATE COPIES OF MATERIALS TO HOUSEHOLDS. Generally the fund will mail only one copy of each prospectus, annual and semi-annual report to shareholders having the same last name and address on the fund's records. The consolidation of these mailings, called householding, benefits the fund through reduced mailing expenses. If you want to receive multiple copies of these materials, you may call us at 1-888-843-7824. You may also notify us in writing. Individual copies of prospectuses and reports will be sent to you commencing within 30 days after we receive your request to stop householding. THE HARTFORD MUTUAL FUNDS 26 FINANCIAL HIGHLIGHTS Because the fund did not commence operations until January ___, 2005, no financial highlight information is available for the fund. THE HARTFORD MUTUAL FUNDS 27 PRIVACY POLICY AND PRACTICES OF THE HARTFORD FINANCIAL SERVICES GROUP, INC. AND ITS AFFILIATES (HEREIN CALLED "WE, OUR, AND US") This Privacy Policy applies to our United States Operations We value your trust. We are committed to the responsible: a) management; b) use; and c) protection; of PERSONAL INFORMATION. This notice describes how we collect, disclose, and protect PERSONAL INFORMATION. We collect PERSONAL INFORMATION to: a) service your TRANSACTIONS with us; and b) support our business functions. We may obtain PERSONAL INFORMATION from: a) YOU; b) your TRANSACTIONS with us; and c) third parties such as a consumer-reporting agency. Based on the type of product or service YOU apply for or get from us, PERSONAL INFORMATION such as: a) your name; b) your address; c) your income; d) your payment; or e) your credit history; may be gathered from sources such as applications, TRANSACTIONS, and consumer reports. To serve YOU and service our business, we may share certain PERSONAL INFORMATION. We will share PERSONAL INFORMATION, only as allowed by law, with affiliates such as: a) our insurance companies; b) our employee agents; c) our brokerage firms; and d) our administrators. As allowed by law, we may share PERSONAL FINANCIAL INFORMATION with our affiliates to: a) market our products; or b) market our services; to YOU without providing YOU with an option to prevent these disclosures. We may also share PERSONAL INFORMATION, only as allowed by law, with unaffiliated third parties including: a) independent agents; b) brokerage firms; c) insurance companies; d) administrators; and e) service providers; who help us serve YOU and service our business. THE HARTFORD MUTUAL FUNDS When allowed by law, we may share certain PERSONAL FINANCIAL INFORMATION with other unaffiliated third parties who assist us by performing services or functions such as: a) taking surveys; b) marketing our products or services; or c) offering financial products or services under a joint agreement between us and one or more financial institutions. We will not sell or share your PERSONAL FINANCIAL INFORMATION with anyone for purposes unrelated to our business functions without offering YOU the opportunity to: a) "opt-out;" or b) "opt-in;" as required by law. We only disclose PERSONAL HEALTH INFORMATION with: a) your proper written authorization; or b) as otherwise allowed or required by law. Our employees have access to PERSONAL INFORMATION in the course of doing their jobs, such as: a) underwriting policies; b) paying claims; c) developing new products; or d) advising customers of our products and services. We use manual and electronic security procedures to maintain: a) the confidentiality; and b) the integrity of; PERSONAL INFORMATION that we have. We use these procedures to guard against unauthorized access. Some techniques we use to protect PERSONAL INFORMATION include: a) secured files; b) user authentication; c) encryption; d) firewall technology; and e) the use of detection software. We are responsible for and must: a) identify information to be protected; b) provide an adequate level of protection for that data; c) grant access to protected data only to those people who must use it in the performance of their job-related duties. Employees who violate our Privacy Policy will be subject to discipline, which may include ending their employment with us. At the start of our business relationship, we will give YOU a copy of our current Privacy Policy. We will also give YOU a copy of our current Privacy Policy once a year if YOU maintain a continuing business relationship with us. We will continue to follow our Privacy Policy regarding PERSONAL INFORMATION even when a business relationship no longer exists between us. As used in this Privacy Notice: APPLICATION means your request for our product or service. THE HARTFORD MUTUAL FUNDS PERSONAL FINANCIAL INFORMATION means financial information such as: a) credit history; b) income; c) financial benefits; or d) policy or claim information. PERSONAL HEALTH INFORMATION means health information such as: a) your medical records; or b) information about your illness, disability or injury. PERSONAL INFORMATION means information that identifies YOU personally and is not otherwise available to the public. It includes: a) PERSONAL FINANCIAL INFORMATION; and b) PERSONAL HEALTH INFORMATION. TRANSACTION means your business dealings with us, such as: a) your APPLICATION; b) your request for us to pay a claim; and c) your request for us to take an action on your account. YOU means an individual who has given us PERSONAL INFORMATION in conjunction with: a) asking about; b) applying for; or c) obtaining; a financial product or service from us if the product or service is used mainly for personal, family, or household purposes. This Privacy Policy is being provided on behalf of the following affiliates of The Hartford Financial Services Group, Inc.: American Maturity Life Insurance Company; Capstone Risk Management, LLC; First State Insurance Company; Hart Life Insurance Company; Hartford Accident & Indemnity Company; Hartford Administrative Services Company; Hartford Casualty Insurance Company; Hartford Equity Sales Company, Inc.; Hartford Fire Insurance Company; Hartford HLS Series Fund II, Inc.; Hartford Insurance Company of Illinois; Hartford Insurance Company of the Midwest; Hartford Insurance Company of the Southeast; Hartford International Life Reassurance Corporation; Hartford Investment Financial Services, LLC; Hartford Investment Management Company; Hartford Life & Accident Insurance Company; Hartford Life and Annuity Insurance Company; Hartford Life Insurance Company; Hartford Lloyd's Insurance Company; Hartford Securities Distribution Company, Inc.; Hartford Series Fund, Inc.; Hartford Specialty Company; Hartford Underwriters Insurance Company; Hartford-Comprehensive Employee Benefit Service Company; International Corporate Marketing Group, LLC; New England Insurance Company; Nutmeg Insurance Agency, Inc.; Nutmeg Insurance Company; Nutmeg Life Insurance Company; Omni General Agency, Inc.; Omni Indemnity Company; Omni Insurance Company; P2P Link, LLC; Pacific Insurance Company, Limited; Planco Financial Services, Inc.; Property and Casualty Insurance Company of Hartford; Sentinel Insurance Company, Ltd.; Servus Life Insurance Company; Specialty Risk Services, Inc.; The Hartford Income Shares Fund, Inc.; The Hartford Mutual Funds II, Inc.; The Hartford Mutual Funds, Inc.; Trumbull Insurance Company; Trumbull Services, L.L.C.; Twin City Fire Insurance Company; Woodbury Financial Services, Inc. THE HARTFORD MUTUAL FUNDS [THIS PAGE IS INTENTIONALLY LEFT BLANK] [THIS PAGE IS INTENTIONALLY LEFT BLANK] FOR MORE INFORMATION Two documents are available that offer further information on The Hartford Mutual Funds: ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS Additional information about the fund will be contained in the financial statements and portfolio holdings in the fund's annual and semi-annual reports. In the fund's annual report you will also find a discussion of the market conditions and investment strategies that will have significantly affected the fund's performance during the last fiscal year, as well as the auditor's report. Because the fund did not commence operations until January __, 2005, the fund has not yet delivered an annual or semi-annual report. STATEMENT OF ADDITIONAL INFORMATION (SAI) The SAI contains more detailed information on the fund. A current SAI has been filed with the Securities and Exchange Commission and is incorporated by reference into (which means it is legally a part of) this prospectus. To request a free copy of the current SAI or for shareholder inquiries or other information about the fund, please contact the fund at: BY MAIL: The Hartford Mutual Funds P.O. Box 64387 St. Paul, MN 55164-0387 (For overnight mail) The Hartford Mutual Funds 500 Bielenberg Drive Woodbury, MN 55125-1400 BY PHONE: 1-888-843-7824 ON THE INTERNET: www.hartfordinvestor.com Or you may view or obtain these documents from the SEC: IN PERSON: at the SEC's Public Reference Room in Washington, DC Information on the operation of the SEC's public reference room may be obtained by calling 1-202-942-8090. BY MAIL: Public Reference Section Securities and Exchange Commission Washington, DC 20549-0102 Requests which are made by mail require the payment of a duplicating fee to the SEC to obtain a document. ON THE INTERNET OR BY E-MAIL: Internet: (on the EDGAR Database on the SEC's internet site) www.sec.gov E-Mail: publicinfo@sec.gov Requests which are made by e-mail require the payment of a duplicating fee to the SEC to obtain a document. SEC FILE NUMBER: The Hartford Mutual Funds, Inc. 811-07589 THE HARTFORD MUTUAL FUNDS CLASS Y SHARES PROSPECTUS JANUARY __, 2005 AS WITH ALL MUTUAL FUNDS, THE HARTFORD SELECT MIDCAP GROWTH FUND THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE SECURITIES OR PASSED UPON THE ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. THE HARTFORD MUTUAL FUNDS P.O. BOX 64387 ST. PAUL, MN 55164-0387 [THIS PAGE IS INTENTIONALLY LEFT BLANK] CONTENTS Introduction Introduction A summary of the fund's goals, principal The Hartford Select MidCap Growth Fund strategies, main risks, performance and expenses Description of other investment strategies and Investment strategies and investment matters investment risks Investment manager and management fee Management of the fund information Information on your account About your account Class Y share investor requirements Compensation to Broker-Dealers, Financial Institutions and Other Persons Opening an account Buying shares Selling shares Transaction policies Dividends and account policies Additional investor services Further information on the fund Financial highlights Privacy policy For more information back cover
THE HARTFORD MUTUAL FUNDS INTRODUCTION This prospectus relates to the Class Y shares of The Hartford Select MidCap Growth Fund (the "fund") and describes the fund's investment strategy and risk/reward profile. The fund is a diversified open-end fund and a series of The Hartford Mutual Funds, Inc. Information on the fund, including risk factors, can be found on the pages following this introduction. The investment manager to the fund is Hartford Investment Financial Services, LLC ("HIFSCO"). As the investment manager, HIFSCO is responsible for the management of the fund and supervision of the fund's investment sub-advisers. The day-to-day portfolio management of the fund is provided by three investment sub-advisers, each of whom manages a portion of the fund: Chartwell Investment Partners, Goldman Sachs Asset Management, L.P. and Northern Capital Management, LLC. Information regarding HIFSCO and each sub-adviser is included under the section entitled "Management of the Fund" in this prospectus. Mutual funds are not bank deposits and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other government agency. Because you could lose money by investing in this fund, be sure to read all risk disclosures carefully before investing. THE HARTFORD MUTUAL FUNDS 1 THE HARTFORD SELECT MIDCAP GROWTH FUND INVESTMENT GOAL. The Hartford Select MidCap Growth Fund seeks long-term capital appreciation. PRINCIPAL INVESTMENT STRATEGY. The fund seeks to achieve its goal by investing primarily in growth style stocks. Under normal circumstances, the fund invests at least 80% of its assets in common stocks of mid-capitalization companies. The fund defines mid-capitalization companies as companies with market capitalizations within the range of companies in the Russell Midcap Growth Index. As of ____________, 2004, the market capitalization of companies included in this index currently ranges from approximately $500 million to $13 billion. The fund may invest up to 20% of its total assets in securities of foreign issuers and non-dollar securities. The fund employs a "multi-manager" approach whereby portions of the fund's cash flows are allocated among different money managers who employ distinct investment styles intended to complement one another. HIFSCO serves as the investment adviser to the fund and is responsible for the oversight of the sub-advisers. HIFSCO has selected three different asset managers to manage the fund: Chartwell Investment Partners, Goldman Sachs Asset Management, L.P. and Northern Capital Management, LLC. Each sub-adviser acts independently of the others and uses its own methodology for selecting investments. Chartwell Investment Partners' ("Chartwell") mid-cap strategy focuses on finding companies that demonstrate strong increases in earnings per share. The portfolio managers and analysts search for three key elements in each targeted investment: secular and sustainable growth in the total enterprise, sound economic foundation, and proven management expertise. In addition, the investment team concentrates on identifying a stable operating environment as perceived through superior business practices, predictable regulatory environments and conservative accounting practices. The team of managers and analysts rely on both proprietary and non-proprietary sources of information for the investment decisions, including direct company contacts, unbiased primary information sources, such as suppliers and customers, as well as Wall Street research for basic company and industry information. Individual securities are evaluated using conservative valuation parameters, measured against their historical levels and relative to a peer universe. Among the valuation metrics utilized are price to earnings, earnings growth rates, ratio of price to earnings to growth, price to cash flow, return on equity, return on assets, return on investments, as well as quarterly earnings expectations and results. In constructing portfolios of sound investments, Chartwell utilizes a continuous process of fundamental research, evaluation, portfolio construction and monitoring. The investment universe comprises 800 securities ranging in market capitalization between $1.5 billion and $10 billion with a median of approximately $3 billion. The portfolio managers initiate investment ideas opportunistically, when securities are attractively valued, yet concentrate holdings in companies best positioned for rapid growth. The portfolio typically comprises 50-60 names. Chartwell's mid-cap growth investment style lies between growth at a reasonable price and momentum investing. Goldman Sachs Asset Management, L.P. ("GSAM") employs a bottom-up investment process that seeks to identify high quality growth companies whose stock price will appreciate as a result of the above average growth in the underlying business. GSAM invests as if it were acquiring the business, rather than investing in the stock. Therefore, analysts spend considerable time evaluating the drivers of long-term growth and profitability for each company. The investment team conducts fundamental analysis of industry and company financials to determine the real worth of the business. In an effort to buy businesses poised for long-term growth, the research team focuses on companies with strong business franchises, favorable long-term prospects and exceptional management. In addition, analysts evaluate the strategic long-term growth capabilities of a business rather than short-term factors. The end result is a portfolio of high quality growth companies with relatively low turnover. The investment process begins with a universe of companies with market capitalizations ranging from $500 million to $13 billion. Investment ideas originate from internal investment group meetings, periodicals or through discussions with other companies under coverage. Companies are evaluated based on numerous investment criteria, namely dominant market shares, established brand names, pricing power, recurring revenue streams, free cash flow, high returns on invested capital, predictable and sustainable growth, long product life cycles, enduring competitive advantage, favorable demographics and excellent management. If the company meets the investment criteria, analysts create a financial model based on the balance sheet, income and cash flow statements and also calculate the company's total enterprise value. Analysts will also meet with management, competitors, customers and suppliers to assess the company's long-term fundamentals, business plan and current and future challenges. The portfolio ultimately consists of approximately 60-80 securities with a median market capitalization of $3 billion to $4 billion. Analysts concentrate on growth companies whose intrinsic business value is attractive relative to its stock price and is expected to increase over time. The expectation is that investing in a growth company at a discount provides a margin of safety and a potential for incremental return to the portfolio as the gap between the stock price and intrinsic value contracts. This is also a key component of GSAM's ability to manage risk over the long term. As it relates to risk management, GSAM employs a number of policies and procedures in portfolio construction, which include monitoring of sector, industry and stock exposures, and utilizes a variety of portfolio construction analysis tools. THE HARTFORD MUTUAL FUNDS 2 THE HARTFORD SELECT MIDCAP GROWTH FUND Northern Capital Management, LLC's ("Northern Capital") mid-cap growth process focuses on bottom-up fundamental research to identify and select growth companies that have significant return potential. The securities in the portfolio can be commonly characterized as growth companies that are market leaders with strong competitive positions. The investment team combines traditional fundamental research with competitive analysis to rank securities based on the level and sustainability of their earnings growth. The team then constructs the portfolio by purchasing securities where the market price does not fully reflect the company's underlying growth prospects. This disciplined process is intended to produce long-term results that exceed the returns of the overall market over a full market cycle. The mid-cap coverage universe initially comprises some 350 companies based on the following criteria: market capitalizations generally between $1 billion to $12 billion, historical earnings per share growth faster than the market, leaders within their respective industries and strong competitive position. Investment analysts construct proprietary earnings models and competitive advantage rankings based on information gathered from various company and industry sources. Analysts' growth assumptions and competitive advantage rankings are also used to develop terminal price/earnings models that reflect analysts' assumptions about the sustainability of each company's long-term earnings. The portfolio is constructed from 50-65 of the most attractive stocks (with a median market capitalization below $5 billion) based on expected returns and consistent with industry diversification constraints. MAIN RISKS. As with most stock funds, the value of your investment may go down in response to overall stock market movements and trends. Because the fund invests in mid-sized companies, its performance may be more volatile than that of a fund that invests primarily in larger companies. Stocks of mid-sized companies may be more risky than stocks of larger companies. These companies may be young and have more limited operating or business history. Because these businesses frequently rely on narrower product lines and niche markets, they can suffer from isolated business setbacks. Mid-sized company stocks as a group could fall out of favor with the market, causing the fund to underperform funds that focus on other types of stocks. You could lose money as a result of your investment. Foreign investments may be more risky than domestic investments. Investments in securities of foreign issuers and non-dollar securities may be affected by fluctuations in currency exchange rates, incomplete or inaccurate financial information on companies, social upheavals and political actions ranging from tax code changes to governmental collapse. Each sub-adviser's investment strategy will influence performance significantly. If a sub-adviser's stock selection strategy doesn't perform as expected, the fund could underperform its peers or lose money. In addition, if a sub-adviser incorrectly assesses a company's prospects for growth, or if its judgment about how other investors will value the company's growth is wrong, then the price of the company's stock may decrease, or it may not increase to the level that the sub-adviser had anticipated. The investment styles employed by the fund's sub-advisers may not be complementary. The interplay of the various strategies employed by the fund's multiple sub-advisers may result in the fund holding a concentration of certain types of securities. This concentration may be beneficial or detrimental to the fund's performance depending upon the performance of those securities and the overall economic environment. The multiple sub-adviser approach could result in a high level of portfolio turnover, resulting in higher fund brokerage expenses and increased tax liability from the fund's realization of capital gains. The fund may trade securities actively, which could increase its transaction costs (thus affecting performance) and may increase your taxable distributions. THE HARTFORD MUTUAL FUNDS 3 THE HARTFORD SELECT MIDCAP GROWTH FUND PAST PERFORMANCE. Because the fund has been in operation for less than one full calendar year, no performance history has been provided. YOUR EXPENSES. This table describes the fees and expenses that you may pay if you buy and hold shares of the fund.
CLASS Y SHAREHOLDER FEES (fees paid directly from your investment) Maximum sales charge as a percentage of offering price (load) None Maximum deferred sales charge (load) None Exchange fees None ANNUAL OPERATING EXPENSES (expenses that are deducted from the fund's assets) Management fees 0.90% Distribution and service (12b-1) fees None Other expenses(1) ____% Total annual operating expenses(2) ____%
(1) Estimated. (2) HIFSCO has voluntarily agreed to limit the total operating expenses of the Class Y shares of the fund, exclusive of taxes, interest, brokerage commissions and extraordinary expenses, to _______%. This policy may be discontinued at any time. EXAMPLE. This example is intended to help you compare the cost of investing in the fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in the fund for the time periods indicated. The example also assumes that your investment has a 5% return each year, that the fund's operating expenses remain the same and that you reinvest all dividends and distributions. Because no sales charges apply to the Class Y shares you would have the same expenses whether or not you redeemed your shares. Although your actual costs may be higher or lower, based on these assumptions your costs would be:
EXPENSES (WITH OR WITHOUT REDEMPTION) CLASS Y Year 1 $ Year 3 $
THE HARTFORD MUTUAL FUNDS 4 INVESTMENT STRATEGIES AND INVESTMENT MATTERS INVESTMENT RISKS GENERALLY There is no assurance that the fund will achieve its investment goal (investment objective), and investors should not consider any one fund alone to be a complete investment program. As with all mutual funds, there is a risk that an investor could lose money by investing in the fund. The different types of securities, investments, and investment techniques used by the fund all have attendant risks of varying degrees. For example, with respect to equity securities, in which the fund may invest as part of its principal investment strategy, there can be no assurance of capital appreciation and an investment in any stock is subject to, among other risks, the risk that the stock market as a whole may decline, thereby depressing the stock's price (market risk), or the risk that the price of a particular issuer's stock may decline due to its financial results (financial risk). With respect to debt securities, there exists, among other risks, the risk that the issuer of a security may not be able to meet its obligations on interest or principal payments at the time required by the instrument (credit risk, a type of financial risk). In addition, the value of debt instruments and other income-bearing securities generally rises and falls inversely with prevailing current interest rates (interest rate risk, a type of market risk). Securities issued by U.S. Government agencies or government-sponsored enterprises may not be guaranteed by the U.S. Treasury. As described below, an investment in the fund entails special additional risks. USE OF MONEY MARKET INVESTMENTS FOR TEMPORARY DEFENSIVE PURPOSES From time to time, as part of its principal investment strategy, the fund may invest some or all of its assets in high quality money market securities for temporary defensive purposes in response to adverse market, economic or political conditions. To the extent the fund is in a defensive position, the fund may lose the benefit of upswings and limit its ability to meet its investment objective. USE OF OPTIONS, FUTURES AND OTHER DERIVATIVES Although not a principal investment strategy, the fund may purchase and sell options, enter into futures contracts and/or utilize other derivative contracts and securities with respect to stocks, bonds, groups of securities (such as financial indices), foreign currencies or interest rates. These techniques, which are incidental to the fund's primary strategy, permit the fund to gain exposure to a particular security, group of securities, interest rate or index, and thereby have the potential for the fund to earn returns that are similar to those which would be earned by direct investments in those securities or instruments. These techniques are also used to manage risk by hedging the fund's portfolio investments. Hedging techniques may not always be available to the fund, and it may not always be feasible for the fund to use hedging techniques even when they are available. Derivatives have risks, however. If the issuer of the derivative instrument does not pay the amount due, the fund could lose money on the instrument. In addition, the underlying security or investment on which the derivative is based, or the derivative itself, may not perform the way the manager expected. As a result, the use of these techniques may result in losses to the fund or increase volatility in the fund's performance. Some derivatives are sophisticated instruments that typically involve a small investment of cash relative to the magnitude of risks assumed. Derivative securities are subject to market risk, which could be significant for those that have a leveraging effect. FOREIGN INVESTMENTS The fund may invest in securities of foreign issuers and non-dollar securities as part of its principal investment strategy. Investments in the securities of foreign issuers or investments in non-dollar securities involve significant risks that are not typically associated with investing in U.S. dollar-denominated securities or securities of domestic issuers. Such investments may be affected by changes in currency rates, changes in foreign or U.S. laws or restrictions applicable to such investments and in exchange control regulations. Some foreign stock markets (and other securities markets) may have substantially less volume than, for example, the New York Stock Exchange (or other domestic markets) and securities of some foreign issuers may be less liquid than securities of comparable domestic issuers. Commissions and dealer mark-ups on transactions in foreign investments may be higher than for similar transactions in the United States. In addition, clearance and settlement procedures may be different in foreign countries and, in certain markets, on certain occasions, such procedures have been unable to keep pace with the volume of securities transactions, thus making it difficult to execute such transactions. The inability of the fund to make intended investments due to settlement problems could cause THE HARTFORD MUTUAL FUNDS 5 INVESTMENT STRATEGIES AND INVESTMENT MATTERS it to miss attractive investment opportunities. Inability to dispose of portfolio securities or other investments due to settlement problems could result either in losses to the fund due to subsequent declines in value of the portfolio investment or, if the fund has entered into a contract to sell the investment, could result in possible liability to the purchaser. Foreign issuers are not generally subject to uniform accounting, auditing and financial reporting standards comparable to those applicable to domestic companies, and there may be less publicly available information about a foreign issuer than about a domestic one. In addition, there is generally less government regulation of stock exchanges, brokers, and listed and unlisted issuers in foreign countries than in the United States. Furthermore, with respect to certain foreign countries, there is a possibility of expropriation or confiscatory taxation, imposition of withholding taxes on dividend or interest payments, limitations on the removal of cash or other assets of the fund, or political or social instability or diplomatic developments which could affect investments in those countries. Individual foreign economies also may differ favorably or unfavorably from the U.S. economy in such respects as growth of gross national product, rate of inflation, capital reinvestment, resource self-sufficiency and balance of payments position. INVESTMENTS IN EMERGING MARKETS The Fund may invest in emerging markets, but not as part of its principal investment strategy. The securities markets of Asian, Latin American, Eastern European, African and other emerging countries are less liquid, are especially subject to greater price volatility, have smaller market capitalizations, have less government regulation and are not subject to as extensive and frequent accounting, financial and other reporting requirements as the securities markets of more developed countries. Further, investment in equity securities of issuers located in Russia and certain other emerging countries involves risk of loss resulting from problems in share registration and custody and substantial economic and political disruptions. The fund may also utilize derivative instruments, such as equity linked securities, to gain exposure to certain emerging markets, but not as a principal investment strategy. These risks are not normally associated with investments in more developed countries. SMALL CAPITALIZATION COMPANIES The fund may invest in securities of small capitalization companies, but not as part of its principal investment strategy. Historically, small market capitalization stocks and stocks of recently organized companies have been more volatile in price than the larger market capitalization stocks often included in the S&P 500 Index. As a result, investing in the securities of such companies involves greater risk and the possibility of greater portfolio price volatility. Among the reasons for the greater price volatility of these small company and unseasoned stocks are the less certain growth prospects of smaller firms and the lower degree of liquidity in the markets for such stocks. Small company stocks are frequently thinly traded and may have to be sold at a discount from current market prices or sold in small lots over an extended period of time. Small companies also often have limited product lines, markets or financial resources, may depend on or use a few key personnel for management, and may be susceptible to losses and risks of bankruptcy. The transaction costs associated with small company stocks are often higher than those of larger capitalization companies. OTHER INVESTMENT COMPANIES The fund is permitted to invest in other investment companies, including investment companies which may not be registered under the Investment Company Act of 1940, as amended (the "1940 Act"), such as holding company depository receipts (HOLDRs), but not as part of its principal investment strategy. Securities in certain countries are currently accessible to the fund only through such investments. The investment in other investment companies is limited in amount by the 1940 Act, and will involve the indirect payment of a portion of the expenses, including advisory fees, of such other investment companies. The fund's investments in investment companies may include various exchange-traded funds ("ETFs"), subject to the fund's investment objective, policies, and strategies as described in the prospectus. ETFs are baskets of securities that, like stocks, trade on exchanges such as the American Stock Exchange and the New York Stock Exchange. ETFs are priced continuously and trade throughout the day. ETFs may track a securities index, a particular market sector, or a particular segment of a securities index or market sector. Some types of equity ETFs are: - "SPDRs" (S&P's Depositary Receipts), which are securities that represent ownership in a long-term unit investment trust that holds a portfolio of common stocks designed to track the performance of an S&P Index. Holders of SPDRs are entitled to THE HARTFORD MUTUAL FUNDS 6 INVESTMENT STRATEGIES AND INVESTMENT MATTERS receive proportionate quarterly cash distributions corresponding to the dividends that accrue to the stocks in the S&P Index's underlying investment portfolio, less any trust expenses. - "Qubes" (QQQ), which invest in the stocks of the Nasdaq 100 Index, a modified capitalization weighted index that includes the stocks of 100 of the largest and most actively traded non-financial companies listed on the Nasdaq Stock Market. Qubes use a unit investment trust structure that allows immediate reinvestment of dividends. - "iShares," which are securities that represent ownership in a long-term unit investment trust that holds a portfolio of common stocks designed to track the performance of specific indexes. - "HOLDRs" (Holding Company Depositary Receipts), which are trust-issued receipts that represent beneficial ownership in a specified group of 20 or more stocks. Unlike other ETFs, the fund can hold the group of stocks as one asset or unbundle the stocks and trade them separately, according to the fund's investment strategies. ETFs can experience many of the same risks associated with individual stocks. ETFs are subject to market risk where the market as a whole, or that specific sector, may decline. ETFs that invest in volatile stock sectors, such as foreign issuers, smaller companies, or technology, are subject to the additional risks to which those sectors are subject. ETFs may trade at a discount to the aggregate value of the underlying securities. The underlying securities in an ETF may not follow the price movements of an entire industry or sector. Trading in an ETF may be halted if the trading in one or more of the ETF's underlying securities is halted. Although expense ratios for ETFs are generally low, frequent trading of ETFs by the fund can generate brokerage expenses. Generally, the fund will not purchase securities of an investment company if, as a result: (1) more than 10% of the fund's total assets would be invested in securities of other investment companies, (2) such purchase would result in more than 3% of the total outstanding voting securities of any such investment company being held by the fund, or (3) more than 5% of the fund's total assets would be invested in any one such investment company. ABOUT THE FUND'S INVESTMENT GOAL The fund's investment goal (or objective) may be changed without approval of the shareholders of the fund. The fund may not be able to achieve its goal. CONSEQUENCES OF PORTFOLIO TRADING PRACTICES The fund may, at times, engage in short-term trading. Short-term trading could produce higher brokerage expenses and transaction costs for the fund, and therefore could adversely affect the fund's performance. The fund is not managed to achieve a particular tax result for shareholders. Shareholders should consult their own tax adviser for individual tax advice. TERMS USED IN THIS PROSPECTUS EQUITY SECURITIES: Equity securities include common stock, preferred stock, securities convertible into common or preferred stock and warrants or rights to acquire common stock, including options. FOREIGN ISSUERS: Foreign issuers include (1) companies organized outside the United States; (2) foreign governments and agencies or instrumentalities of foreign governments; and (3) issuers whose economic fortunes and risks are primarily linked with markets outside the United States. Certain companies organized outside the United States may not be deemed to be foreign issuers if the issuer's economic fortunes and risks are primarily linked with U.S. markets. NON-DOLLAR SECURITIES: Securities denominated or quoted in foreign currency or paying income in foreign currency. INVESTMENT POLICIES The fund has a name which suggests a focus on a particular type of investment. In accordance with Rule 35d-1 under the 1940 Act, the fund has adopted a policy that it will, under normal circumstances, invest at least 80% of the value of its assets in investments of the type suggested by its name. For purposes of this policy, "assets" means net assets plus the amount of any borrowings for investment THE HARTFORD MUTUAL FUNDS 7 INVESTMENT STRATEGIES AND INVESTMENT MATTERS purposes. In addition, in appropriate circumstances, synthetic investments may be included in the 80% basket if they have economic characteristics similar to the other investments included in the basket. The fund's policy to invest at least 80% of its assets in such a manner is not a "fundamental" one, which means that it may be changed without the vote of a majority of the fund's outstanding shares as defined in the 1940 Act. The name of the fund may be changed at any time by a vote of the fund's board of directors. However, Rule 35d-1 also requires that shareholders be given written notice at least 60 days prior to any change by a fund of its 80% investment policy covered by Rule 35d-1. ADDITIONAL INVESTMENT STRATEGIES AND RISKS The fund may invest in various securities and engage in various investment techniques that are not the principal focus of the fund and therefore are not described in this prospectus. These securities and techniques, together with their risks, are discussed in the fund's Statement of Additional Information ("SAI") which may be obtained free of charge by contacting the fund (see back cover for address and phone number). THE HARTFORD MUTUAL FUNDS 8 MANAGEMENT OF THE FUND THE INVESTMENT MANAGER HIFSCO is the investment manager to the fund. HIFSCO is a wholly-owned indirect subsidiary of The Hartford Financial Services Group, Inc. ("The Hartford"), a Connecticut financial services company with over $_____ billion in assets as of _____________, 2004. At the same time, HIFSCO had over $____ billion in assets under management. HIFSCO is responsible for the management of the fund and supervises the activities of the investment sub-advisers described below. HIFSCO is principally located at 200 Hopmeadow Street, Simsbury, Connecticut 06089. The fund relies on an exemptive order from the Securities and Exchange Commission under which it uses a "Manager of Managers" structure. This permits HIFSCO to appoint a new sub-adviser, with the approval by the Board of Directors and without obtaining approval from those shareholders that participate in the fund. Within 90 days after hiring any new sub-adviser, affected shareholders will receive all information about the new sub-advisory relationship that would have been included if a proxy statement had been required. HIFSCO will not enter into a sub-advisory agreement with an affiliated sub-adviser unless shareholders approve such agreement. THE INVESTMENT SUB-ADVISERS Chartwell Investment Partners ("Chartwell") is an investment sub-adviser to the fund. Founded in 1997, Chartwell is a multi-product equity and fixed income investment adviser. As of___________, 2004, Chartwell managed over $_________________ in assets for over 200 institutional, sub-advisory and private client relationships. Chartwell is principally located at 1235 Westlakes Drive, Suite 400, Berwyn, Pennsylvania 19312. Goldman Sachs Asset Management, L.P. ("GSAM") is an investment sub-adviser to the fund. GSAM has been registered as an investment adviser with the Securities and Exchange Commission since 1990, and is an affiliate of Goldman, Sachs & Co., as a part of its Investment Management Division. As of _________, 2004, GSAM, along with other units of the Investment Management Division of Goldman, Sachs & Co., had assets under management of approximately $________ . GSAM is principally located at 32 Old Slip, New York, New York 10005. Northern Capital Management, LLC ("Northern Capital") is an investment sub-adviser to the fund. Northern Capital is a professional investment management firm providing investment advisory services to institutional and individual investors. As of________, 2004, Northern Capital had investment management authority over $________ in assets. Northern Capital is principally located at 8010 Excelsior Drive, Suite 300, Madison, Wisconsin 53717. MANAGEMENT FEES The fund pays a monthly management fee to HIFSCO based on a stated percentage of the fund's average daily net asset value as follows:
AVERAGE DAILY NET ASSETS ANNUAL RATE ------------------------ ----------- First $500 million 0.90% Next $500 million 0.85% Amount over $1 billion 0.80%
Because the fund will not have commenced operations until January __, 2005, information is not available regarding fees paid by the fund to HIFSCO. PORTFOLIO MANAGERS OF THE FUND The following persons have had primary responsibility for the day-to-day management of the fund since its commencement of operations. THE HARTFORD MUTUAL FUNDS 9 MANAGEMENT OF THE FUND CHARTWELL INVESTMENT PARTNERS The fund is co-managed by Edward N. Antoian and Mark J. Cunneen, with Kevin R. Baker, David Choi, Raymond T. Jackson, Michael D. Jones, and David E. Reidinger as assistant portfolio managers. Edward N. Antoian, Managing Partner and Senior Portfolio Manager at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Antoian joined Chartwell in 1997. From 1984 to 1997, he was a Senior Portfolio Manager at Delaware Investment Advisers, managing institutional assets in small and mid-cap growth styles as well as the Trend and DelCap Funds. Kevin R. Baker, Principal, Senior Portfolio Analyst at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Baker joined Chartwell in 1999. From 1997 to 1999, he was a Consultant to Friess Associates, Inc. for the Jefferies Group, where he analyzed and selected equity investments for the Brandywine Fund as well as individual and institutional clients in mid-cap growth style. David Choi, Portfolio Analyst at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Choi joined Chartwell in 1999. Prior to joining Chartwell, he worked for two years at Daewoo Securities in Seoul, Korea where he was an equity research analyst, entrusted with fundamental and quantitative analysis of South Korean equities. Mark J. Cunneen, Partner and Senior Portfolio Manager at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Cunneen joined Chartwell in 2003. Prior to joining Chartwell, he was a Managing Partner and Portfolio Manager at Churchfield Capital, where he founded and managed long/short equity hedge funds 2002 to 2003. From 2000 to 2002, Mr. Cunneen was employed by J & W Seligman as a Portfolio Manager and was head of the Small Cap Growth product. Raymond T. Jackson, Portfolio Analyst at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Jackson joined Chartwell in 2001. Prior to joining Chartwell, he was employed as a staff accountant at Cigna Corporation from 2000 to 2001. Michael D. Jones, Partner and Senior Portfolio Manager at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Jones joined Chartwell in 1998. From 1995 to 1998, he was a Portfolio Manager at Pilgrim Baxter and Associates, where he managed over $1 billion in institutional growth equity accounts. David E. Reidinger, Portfolio Manager and Senior Analyst at Chartwell, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Reidinger joined Chartwell in 2004. Prior to joining Chartwell, he was a Portfolio Manager and analyst with Circle T Partners, covering the technology sector from 2003 to 2004. From 2000 to 2003, he was a Vice President and Portfolio Manager with Morgan Stanley Asset Management (Miller Anderson). GOLDMAN SACHS ASSET MANAGEMENT, L.P. The fund is managed by a team of investment professionals led by Co-Chief Investment Officers Herbert E. Ehlers, David G. Shell, Steven M. Barry and Gregory H. Ekizian. Herbert E. Ehlers, Managing Director and Co-Chief Investment Officer at GSAM, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Ehlers joined GSAM as a senior portfolio manager and Chief Investment Officer of the Growth team in 1997. David G. Shell, Managing Director and Co-Chief Investment Officer at GSAM, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Shell joined GSAM as a portfolio manager in 1997. Steven M. Barry, Managing Director and Co-Chief Investment Officer at GSAM, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Barry joined GSAM as a portfolio manager in 1999. From 1988 to 1999, he was a portfolio manager at Alliance Capital Management. Gregory H. Ekizian, Managing Director and Co-Chief Investment Officer at GSAM, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Ekizian joined GSAM as portfolio manager and Co-Chair of the Growth Investment Committee in 1997. THE HARTFORD MUTUAL FUNDS 10 MANAGEMENT OF THE FUND NORTHERN CAPITAL MANAGEMENT, LLC The fund is co-managed by Daniel T. Murphy and Brian A. Hellmer. Daniel T. Murphy, President and Chief Investment Officer of Northern Capital, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Murphy joined Northern Capital in 1995. He heads the investment management group, where he is responsible for all aspects of portfolio management. He is also a member of the firm's Investment Committee, where he participates in the firm's investment strategy and portfolio management decisions, and is co-head of the firm's portfolio management team, where he is responsible for the firm's internal valuation modeling. Mr. Murphy also conducts primary research and stock selection activities for various industry groups. Brian A. Hellmer, Senior Vice President and Director of Research of Northern Capital, has served as a co-portfolio manager of the fund since its inception (2005). Mr. Hellmer joined Northern Capital in 1996. He manages investment analysts and traders, and has portfolio management responsibility for all client accounts. He is also a member of the firm's Investment Committee, where he participates in the firm's investment strategy and portfolio management decisions, and is co-head of the firm's portfolio management team, where he is responsible for the firm's security valuation efforts. THE HARTFORD MUTUAL FUNDS 11 ABOUT YOUR ACCOUNT CLASS Y SHARE INVESTOR REQUIREMENTS The purchase of Class Y shares is limited to the following investors. Individual investors must invest at least $10 million in Class Y shares of the fund. The following types of institutional investors must invest at least $1 million in Class Y shares of the fund: (1) employee benefit or retirement plans which have (a) at least $10 million in plan assets, or (b) 750 or more employees eligible to participate at the time of purchase; (2) banks and insurance companies or other large institutional investors; (3) investment companies; (4) employee benefit or retirement plans of The Hartford or broker-dealer wholesalers and their affiliates; (5) non-profit organizations, charitable trusts, foundations and endowments; and (6) trust companies with assets held in a fiduciary, advisory, custodial or similar capacity over which the trust company has full or shared investment discretion. ADDITIONAL COMPENSATION TO BROKER-DEALERS, FINANCIAL INSTITUTIONS AND OTHER PERSONS ("FINANCIAL INTERMEDIARIES") The distributor and its affiliates pay, out of their own assets, significant additional compensation to Financial Intermediaries (who may or may not be affiliates of the distributor) in connection with the sale and distribution of the fund's shares ("Additional Payments") based on a number of factors described in the fund's SAI. This additional compensation is not paid directly by you. With the exception of certain compensation arrangements specifically discussed in the SAI and "Negotiated Additional Amounts" defined below, these Additional Payments, which are generally based on average net assets (or on aged assets) of the fund attributable to a particular Financial Intermediary, on sales of the fund's shares attributable to a particular Financial Intermediary, and/or on reimbursement of ticket charges, may, but are normally not expected to, exceed, in the aggregate, 0.40% of the average net assets of the fund attributable to a particular Financial Intermediary. Please refer to the SAI for a listing of Financial Intermediaries to whom the distributor makes such Additional Payments. Separate Additional Payments may also be made in connection with the sale and distribution of the fund's shares in such forms as, among others, "due diligence" payments and "marketing support" fees ("Negotiated Additional Amounts"), as discussed in greater detail in the SAI. These Negotiated Additional Amounts paid to Financial Intermediaries in connection with the sale and distribution of the fund's shares may also pertain to the sale and distribution of other investment products distributed by affiliates of the distributor. Because the fund will not have commenced operations until January __, 2005, there is no information regarding Additional Payments, including Negotiated Additional Amounts, paid by the distributor or its affiliates to Financial Intermediaries. OPENING AN ACCOUNT IMPORTANT INFORMATION ABOUT PROCEDURES FOR OPENING A NEW ACCOUNT. To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. What this means for you: when you open an account, you will be asked to provide your name, address, date of birth, social security number and other information that identifies you. You may also be asked to show your driver's license or other identifying documents. The information you provide may also be validated through various public databases. If the fund is not able to adequately identify you within the timeframes set forth in the law, your shares may be automatically redeemed. If the net asset value per share has decreased since your purchase, you will lose money as a result of this redemption. Please note that if you are purchasing shares through your employer's tax qualified retirement plan, you may need to call the administrator of the plan for details on purchases, redemptions and other account activity. Although brokers may be compensated for the sale of Class Y shares in certain cases, there will be no cost to you. 1 Read this prospectus carefully. 2 Determine how much you want to invest. The minimum initial investment for the fund is $1 million ($10 million if you do not qualify as one of the types of institutional investors listed above), although this minimum may be waived at the discretion of the fund's officers. 3 Complete the appropriate parts of the account application including any privileges desired. By applying for privileges now, you can avoid the delay and inconvenience of having to file an additional application if you want to add privileges later. If you have questions, please contact your financial representative or call the transfer agent at the number shown below. 4 Make your initial investment selection. THE HARTFORD MUTUAL FUNDS 12 ABOUT YOUR ACCOUNT ADDRESS: PHONE NUMBER: THE HARTFORD MUTUAL FUNDS 1-888-843-7824 P.O. BOX 64387 ST. PAUL, MN 55164-0387 OR CONTACT YOUR FINANCIAL REPRESENTATIVE OR PLAN ADMINISTRATOR FOR INSTRUCTIONS AND ASSISTANCE. THE HARTFORD MUTUAL FUNDS 13 BUYING SHARES
OPENING AN ACCOUNT ADDING TO AN ACCOUNT ------------------ -------------------- BY CHECK - Make out a check for the investment amount, payable - Make out a check for the investment amount, payable to (CHECK to "The Hartford Mutual Funds". "The Hartford Mutual Funds". GRAPHIC) - Deliver the check and your completed application to - Fill out the detachable investment slip from an account your financial representative, plan administrator statement. If no slip is available, include a note or mail to the address listed below. specifying the fund name, your share class, your account number and the name(s) in which the account is registered. - Deliver the check and your investment slip or note to your financial representative, plan administrator or mail to the address listed below. BY EXCHANGE - Call your financial representative, plan - Call your financial representative, plan administrator (ARROW administrator or the transfer agent at the number or the transfer agent at the number below to request an GRAPHIC) below to request an exchange. The minimum exchange exchange. The minimum exchange amount is $500. amount is $500. BY WIRE - Deliver your completed application to your financial - Instruct your bank to wire the amount of your (WIRE representative, or mail it to the address below. investment to: GRAPHIC) U.S. Bank National Association - Obtain your account number by calling your financial ABA #091000022, credit account no: representative or the phone number below. 1-702-2514-1341 The Hartford Mutual Funds Purchase Account - Instruct your bank to wire the amount of your For further credit to: (your name) investment to: Hartford Mutual Funds Account Number: U.S. Bank National Association (your account number) ABA #091000022, credit account no: Specify the fund name, your share class, your account 1-702-2514-1341 number and the name(s) in which the account is The Hartford Mutual Funds Purchase Account registered. Your bank may charge a fee to wire funds. For further credit to: (your name) Hartford Mutual Funds Account Number: (your account number) Specify the fund name, your share class, the new account number and the name(s) in which the account is registered. Your bank may charge a fee to wire funds. BY PHONE - See "By Wire" and "By Exchange" - Verify that your bank or credit union is a member of (PHONE the Automated Clearing House (ACH) system. GRAPHIC) - Complete the "Telephone Exchanges and Telephone Redemption" and "Bank Account or Credit Union Information" sections on your account application. - Call the transfer agent at the number below to verify that these features are in place on your account. - Tell the transfer agent representative the fund name, your share class, your account number, the name(s) in which the account is registered and the amount of your investment.
ADDRESS: PHONE NUMBER: THE HARTFORD MUTUAL FUNDS 1-888-843-7824 P.O. BOX 64387 ST. PAUL, MN 55164-0387 OR CONTACT YOUR FINANCIAL REPRESENTATIVE OR PLAN ADMINISTRATOR FOR INSTRUCTIONS AND ASSISTANCE. THE HARTFORD MUTUAL FUNDS 14 SELLING SHARES BY LETTER - Write a letter of instruction or complete a power of attorney (LETTER indicating the fund name, your share class, GRAPHIC) your account number, the name(s) in which the account is registered and the dollar value or number of shares you wish to sell. - Include all signatures and any additional documents that may be required (see next page). - Mail the materials to the address below. - A check will be mailed to the name(s) and address in which the account is registered, or otherwise according to your letter of instruction. Overnight delivery may be requested for a nominal fee (currently $10) which will be deducted from redemption proceeds. BY PHONE - Restricted to sales of up to $50,000 in any 7-day period. (PHONE - To place your order with a representative, call the GRAPHIC) transfer agent at the number below between 8 A.M. and 7 P.M. Eastern Time (between 7 A.M. and 6 P.M. Central Time) Monday through Thursday and between 8 A.M. and 6 P.M. Eastern Time (between 7 A.M. and 5 P.M. Central Time) on Friday. Orders received after 4 P.M. Eastern Time (3 P.M. Central Time) will receive the next business day's offering price. - For automated service 24 hours a day using your touch -tone phone, call the number below. BY WIRE OR ELECTRONIC FUNDS TRANSFER (EFT) - Fill out the "Telephone Exchanges and Telephone (COMPUTER Redemption" and "Bank Account or Credit Union Information" GRAPHIC) sections of your new account application. - Call the transfer agent to verify that the telephone redemption privilege is in place on an account, or to request the forms to add it to an existing account. - Generally, amounts of $1,000 or more will be wired on the next business day. Your bank may charge a fee for this service. - Amounts of less than $1,000 may be sent by EFT or by check. Funds from EFT transactions are generally available by the second business day. Your bank may charge a fee for this service. - Phone requests are limited to amounts up to $50,000 in a 7-day period. BY EXCHANGE - Obtain a current prospectus for the fund into which you (ARROW are exchanging by calling your financial representative GRAPHIC) or the transfer agent at the number below. - Call your financial representative or the transfer agent to request an exchange. ADDRESS: PHONE NUMBER: THE HARTFORD MUTUAL FUNDS 1-888-843-7824 P.O. BOX 64387 ST. PAUL, MN 55164-0387 OR CONTACT YOUR FINANCIAL REPRESENTATIVE OR PLAN ADMINISTRATOR FOR INSTRUCTIONS AND ASSISTANCE. THE HARTFORD MUTUAL FUNDS 15 SELLING SHARES IN WRITING BY LETTER In certain circumstances, you will need to make your request to sell shares in writing. You may need to include additional items with your request, as shown in the table below. You may also need to include a signature guarantee, which protects you against fraudulent orders. You will need a signature guarantee if: - your address of record has changed within the past 30 days (LETTER - you are selling more than $50,000 worth of shares GRAPHIC) - you are requesting payment other than by a check mailed to the address of record and payable to the registered owner(s) Please note that a notary public CANNOT provide a signature guarantee. Please check with a representative of your bank or other financial institution about obtaining a signature guarantee. ADDRESS: PHONE NUMBER: THE HARTFORD MUTUAL FUNDS 1-888-843-7824 P.O. BOX 64387 ST. PAUL, MN 55164-0387 OR CONTACT YOUR FINANCIAL REPRESENTATIVE OR PLAN ADMINISTRATOR FOR INSTRUCTIONS AND ASSISTANCE. THE HARTFORD MUTUAL FUNDS 16 TRANSACTION POLICIES VALUATION OF SHARES The net asset value per share (NAV) is determined for the fund and class as of the close of regular trading on the New York Stock Exchange ("NYSE") (typically 4:00 p.m. Eastern Time) on each business day that the NYSE is open. The net asset value is determined by dividing the value of the fund's net assets attributable to a class of shares by the number of shares outstanding for that class. The fund uses market prices in valuing portfolio securities, but may use fair value estimates, as determined under procedures established by the Board of Directors, if reliable market prices are not available. Fair value pricing may be used by the fund when current market values are unavailable or when an event occurs after the close of the exchange on which the fund's portfolio securities are principally traded that is likely to have changed the value of the securities. The use of fair value pricing by the fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated using prevailing market values. Securities of foreign issuers and non-dollar securities are valued on the basis of quotations from the primary market in which they are traded, and are translated from the local currency into U.S. dollars using prevailing exchange rates. Debt securities (other than short-term obligations) held by the fund are valued on the basis of valuations furnished by an unaffiliated pricing service which determines valuations for normal institutional size trading units of debt securities. Securities for which prices are not available from an independent pricing service, but where an active market exists, are valued using market quotations obtained from one or more dealers that make markets in the securities or from the widely-used quotation system in accordance with procedures established by the Board of Directors. Short term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. Investments that will mature in 60 days or less, are valued at amortized cost, which approximates market value. The fund may invest in securities primarily traded in foreign securities markets. Foreign securities markets may trade on days when the fund does not compute its net asset value or may close (generating closing prices) at times before or after the NYSE. Consequently, the net asset value of the fund and the value of its shares may change on days, or at times, when an investor cannot redeem the fund's shares. BUY AND SELL PRICES When you buy shares, you pay the NAV plus any applicable sales charges. When you sell shares, you receive the NAV less any applicable sales charges. EXECUTION OF REQUESTS The fund is open on those days when the New York Stock Exchange is open, typically Monday through Friday. Buy and sell requests are executed at the next NAV to be calculated after your request is received, if your order is complete (has all required information), by the transfer agent or authorized broker-dealers and third-party administrators. At times of peak activity, it may be difficult to place requests by phone. During these times, consider sending your request in writing. Although the fund does not charge a transaction fee, you may be re charged a fee by brokers for the purchase or sale of the fund's shares. This transaction fee is separate from any sales charge that the fund may apply. In unusual circumstances, the fund may temporarily suspend the processing of sell requests, or may postpone payment of redemption proceeds for up to three business days or longer, as allowed by federal securities laws. REQUESTS IN "GOOD ORDER" All purchase and redemption requests must be received by the fund in "good order". This means that your request must include: - The fund name and account number. - The amount of the transaction (in dollars or shares). - Signatures of all owners exactly as registered on the account (for mail requests). THE HARTFORD MUTUAL FUNDS 17 TRANSACTION POLICIES - Signature guarantees (if required). - Any supporting legal documentation that may be required. TELEPHONE TRANSACTIONS For your protection, telephone requests may be recorded in order to verify their accuracy. Also for your protection, telephone transactions are not permitted on accounts whose names or addresses have changed within the past 30 days. Proceeds from telephone transactions can only be mailed to the address of record. EXCHANGES You may exchange shares of the fund for shares of the same class of any other Harford Mutual Fund. The registration for both accounts involved must be identical. You may be subject to tax liability or sales charges as a result of your exchange. The fund reserves the right to amend or terminate the exchange privilege at any time, for any reason. RIGHT TO REJECT OR RESTRICT PURCHASE AND EXCHANGE ORDERS The fund does not knowingly permit the frequent trading of fund shares in response to short-term fluctuations in the market, also known as market timing. Do not invest in the fund if you are a market timer. The fund is intended to be a long-term investment vehicle and is not designed to provide investors with a means of speculating on short-term market movements. Because excessive account transactions can disrupt the management of the fund, negatively affect the fund's performance and increase transaction costs for all shareholders, the fund limits account activity as follows: - you may make no more than two substantive exchanges out of the fund in any 90 day period (excluding automatic programs); - the fund may refuse a share purchase at any time, for any reason; - the fund may revoke an investor's exchange privilege at any time, for any reason, and may consider an investor's trading history in any Hartford Mutual Fund, including trading history in other accounts under common ownership and control, in making this determination. "Substantive" means a dollar amount that the fund determines, in its sole discretion, could adversely affect the management of the fund. The fund will use reasonable efforts to detect market timers. However, some investors purchase or sell shares of the fund through financial intermediaries and omnibus accounts that aggregate the orders of several investors and forward the aggregate orders to the fund. Because the fund receives aggregate purchase and sales orders from the financial intermediaries and omnibus accounts, the fund cannot always know or reasonably detect excessive trading by investors that enter orders through these intermediaries or omnibus accounts. [TO BE UPDATED.] CERTIFICATED SHARES Shares are electronically recorded and therefore share certificates are not issued. SALES IN ADVANCE OF PURCHASE PAYMENTS When you place a request to sell shares for which the purchase money has not yet been collected, the request will be executed in a timely fashion, but the fund will not release the proceeds to you until your purchase payment clears. This may take up to 10 calendar days after the purchase. THE HARTFORD MUTUAL FUNDS 18 TRANSACTION POLICIES SPECIAL REDEMPTIONS Although it would not normally do so, the fund has the right to pay the redemption price of shares of the fund in whole or in part in portfolio securities. When the shareholder sells portfolio securities received in this fashion, a brokerage charge would be incurred. Any such securities would be valued for the purposes of making such payment at the same value as used in determining net asset value. The fund, however, always redeems shares solely in cash up to the lesser of $250,000 or 1% of the net asset value of the fund during any 90 day period for any one account. PAYMENT REQUIREMENTS All of your purchases must be made in U.S. dollars and checks must be drawn on U.S. banks and made payable to The Hartford Mutual funds, or in the case of a retirement account, to the custodian or trustee. You may not purchase shares with a third party check. If your check does not clear, your purchase will be canceled and you will be liable for any losses or fees that the fund or HIFSCO has incurred. Certain broker-dealers and financial institutions may enter confirmed purchase orders with the fund on behalf of customers, by phone or other electronic means, with payment to follow within the customary settlement period (generally within three business days). If payment is not received by that time, the order will be canceled and the broker-dealer or financial institution will be held liable for the resulting fees or losses. DIVIDENDS AND ACCOUNT POLICIES ACCOUNT STATEMENTS In general, you will receive account statements as follows: - after every transaction (except certain automatic payment and redemption arrangements and dividend or distribution reinvestment) that affects your account balances - after any changes of name or address of the registered owner(s) - in all other circumstances, every quarter during which there is activity in your account, and at least annually Every year you should also receive, if applicable, a Form 1099-DIV tax information statement. If, however, you are a participant in an employer-sponsored retirement plan or you hold your shares in the name of your broker, you will receive statements from your plan administrator or broker pursuant to their policies. DIVIDENDS AND DISTRIBUTIONS The fund intends to distribute substantially all of its net income and capital gains to shareholders at least once a year. Dividends from net investment income of the fund is normally declared and paid annually. Unless shareholders specify otherwise, all dividends and distributions received from the fund are automatically reinvested in additional full or fractional shares of the fund. If you elect to receive monthly/quarterly dividends in cash, you will only receive a check if the dividend amount exceeds $10. If the dividend is $10 or less, the amount will automatically be reinvested in the fund. If you would like to receive cash dividends, regardless of the amount, you can establish an electronic funds transfer to your bank. Please call the fund for assistance in establishing electronic funds transfer transactions at 1-888-843-7824. TAXABILITY OF DIVIDENDS Dividends and distributions you receive from the fund, whether reinvested or taken as cash, are generally considered taxable. Distributions from the fund's long-term capital gains are taxable as long-term capital gains, regardless of how long you held your shares. Distributions from short-term capital gains and from ordinary income (other than certain qualified dividend income) are generally taxable as ordinary income. A portion of dividends from ordinary income may qualify for the dividends-received deduction for corporations. Distributions from certain qualified dividend income generally are taxable to individuals at the same rates that apply to long-term capital gains, if certain holding period and other requirements are met. Some dividends paid in January may be taxable as if they had been paid the previous December. THE HARTFORD MUTUAL FUNDS 19 TRANSACTION POLICIES The Form 1099 that is mailed to you every January details your dividends and distributions and their federal tax category, although you should verify your tax liability with your tax professional. TAXABILITY OF TRANSACTIONS Unless your shares are held in a qualified retirement account, any time you sell or exchange shares, it is considered a taxable event for you. You may have a capital gain or a loss on the transaction which will be long-term or short-term, depending upon how long you held your shares. You are responsible for any tax liabilities generated by your transactions. The fund may be required to withhold U.S. federal income tax at the rate of 28% of all taxable distributions payable to you if you fail to provide the fund with your correct taxpayer identification number or to make required certifications, or if you have been notified by the IRS that you are subject to backup withholding. Backup withholding is not an additional tax. Any amounts withheld may be credited against your U.S. federal income tax liability. INFLATION-PROTECTED DEBT SECURITIES Periodic adjustments for inflation to the principal amount of an inflation-protected debt security may give rise to original issue discount, which will be includable in the fund's gross income. Due to original issue discount, the fund may be required to make annual distributions to shareholders that exceed the cash received, which may cause the fund to liquidate certain investments when it is not advantageous to do so. Also, if the principal value of an inflation-protected debt security is adjusted downward due to deflation, amounts previously distributed in the taxable year may be characterized in some circumstances as return of capital. Distributions from the fund may also be subject to state, local and foreign taxes. You should consult your own tax adviser regarding the particular tax consequences of an investment in a fund. ADDITIONAL INVESTOR SERVICES ELECTRONIC TRANSFERS THROUGH AUTOMATED CLEARING HOUSE (ACH) allow you to initiate a purchase or redemption for as little as $50 or as much as $50,000 between your bank account and fund account using the ACH network. If you are a participant in a tax qualified retirement plan, check with your plan administrator for additional investor services. THE HARTFORD MUTUAL FUNDS 20 FINANCIAL HIGHLIGHTS Because the fund did not commence operations until January ___, 2005, no financial highlight information is available for the fund. THE HARTFORD MUTUAL FUNDS 21 PRIVACY POLICY AND PRACTICES OF THE HARTFORD FINANCIAL SERVICES GROUP, INC. AND ITS AFFILIATES (HEREIN CALLED "WE, OUR, AND US") This Privacy Policy applies to our United States Operations We value your trust. We are committed to the responsible: a) management; b) use; and c) protection; of PERSONAL INFORMATION. This notice describes how we collect, disclose, and protect PERSONAL INFORMATION. We collect PERSONAL INFORMATION to: a) service your TRANSACTIONS with us; and b) support our business functions. We may obtain PERSONAL INFORMATION from: a) YOU; b) your TRANSACTIONS with us; and c) third parties such as a consumer-reporting agency. Based on the type of product or service YOU apply for or get from us, PERSONAL INFORMATION such as: a) your name; b) your address; c) your income; d) your payment; or e) your credit history; may be gathered from sources such as applications, TRANSACTIONS, and consumer reports. To serve YOU and service our business, we may share certain PERSONAL INFORMATION. We will share PERSONAL INFORMATION, only as allowed by law, with affiliates such as: a) our insurance companies; b) our employee agents; c) our brokerage firms; and d) our administrators. As allowed by law, we may share PERSONAL FINANCIAL INFORMATION with our affiliates to: a) market our products; or b) market our services; to YOU without providing YOU with an option to prevent these disclosures. We may also share PERSONAL INFORMATION, only as allowed by law, with unaffiliated third parties including: a) independent agents; b) brokerage firms; c) insurance companies; d) administrators; and e) service providers; who help us serve YOU and service our business. THE HARTFORD MUTUAL FUNDS When allowed by law, we may share certain PERSONAL FINANCIAL INFORMATION with other unaffiliated third parties who assist us by performing services or functions such as: a) taking surveys; b) marketing our products or services; or c) offering financial products or services under a joint agreement between us and one or more financial institutions. We will not sell or share your PERSONAL FINANCIAL INFORMATION with anyone for purposes unrelated to our business functions without offering YOU the opportunity to: a) "opt-out;" or b) "opt-in;" as required by law. We only disclose PERSONAL HEALTH INFORMATION with: a) your proper written authorization; or b) as otherwise allowed or required by law. Our employees have access to PERSONAL INFORMATION in the course of doing their jobs, such as: a) underwriting policies; b) paying claims; c) developing new products; or d) advising customers of our products and services. We use manual and electronic security procedures to maintain: a) the confidentiality; and b) the integrity of; PERSONAL INFORMATION that we have. We use these procedures to guard against unauthorized access. Some techniques we use to protect PERSONAL INFORMATION include: a) secured files; b) user authentication; c) encryption; d) firewall technology; and e) the use of detection software. We are responsible for and must: a) identify information to be protected; b) provide an adequate level of protection for that data; c) grant access to protected data only to those people who must use it in the performance of their job-related duties. Employees who violate our Privacy Policy will be subject to discipline, which may include ending their employment with us. At the start of our business relationship, we will give YOU a copy of our current Privacy Policy. We will also give YOU a copy of our current Privacy Policy once a year if YOU maintain a continuing business relationship with us. We will continue to follow our Privacy Policy regarding PERSONAL INFORMATION even when a business relationship no longer exists between us. As used in this Privacy Notice: APPLICATION means your request for our product or service. THE HARTFORD MUTUAL FUNDS PERSONAL FINANCIAL INFORMATION means financial information such as: a) credit history; b) income; c) financial benefits; or d) policy or claim information. PERSONAL HEALTH INFORMATION means health information such as: a) your medical records; or b) information about your illness, disability or injury. PERSONAL INFORMATION means information that identifies YOU personally and is not otherwise available to the public. It includes: a) PERSONAL FINANCIAL INFORMATION; and b) PERSONAL HEALTH INFORMATION. TRANSACTION means your business dealings with us, such as: a) your APPLICATION; b) your request for us to pay a claim; and c) your request for us to take an action on your account. YOU means an individual who has given us PERSONAL INFORMATION in conjunction with: a) asking about; b) applying for; or c) obtaining; a financial product or service from us if the product or service is used mainly for personal, family, or household purposes. This Privacy Policy is being provided on behalf of the following affiliates of The Hartford Financial Services Group, Inc.: American Maturity Life Insurance Company; Capstone Risk Management, LLC; First State Insurance Company; Hart Life Insurance Company; Hartford Accident & Indemnity Company; Hartford Administrative Services Company; Hartford Casualty Insurance Company; Hartford Equity Sales Company, Inc.; Hartford Fire Insurance Company; Hartford HLS Series Fund II, Inc.; Hartford Insurance Company of Illinois; Hartford Insurance Company of the Midwest; Hartford Insurance Company of the Southeast; Hartford International Life Reassurance Corporation; Hartford Investment Financial Services, LLC; Hartford Investment Management Company; Hartford Life & Accident Insurance Company; Hartford Life and Annuity Insurance Company; Hartford Life Insurance Company; Hartford Lloyd's Insurance Company; Hartford Securities Distribution Company, Inc.; Hartford Series Fund, Inc.; Hartford Specialty Company; Hartford Underwriters Insurance Company; Hartford-Comprehensive Employee Benefit Service Company; International Corporate Marketing Group, LLC; New England Insurance Company; Nutmeg Insurance Agency, Inc.; Nutmeg Insurance Company; Nutmeg Life Insurance Company; Omni General Agency, Inc.; Omni Indemnity Company; Omni Insurance Company; P2P Link, LLC; Pacific Insurance Company, Limited; Planco Financial Services, Inc.; Property and Casualty Insurance Company of Hartford; Sentinel Insurance Company, Ltd.; Servus Life Insurance Company; Specialty Risk Services, Inc.; The Hartford Income Shares Fund, Inc.; The Hartford Mutual Funds II, Inc.; The Hartford Mutual Funds, Inc.; Trumbull Insurance Company; Trumbull Services, L.L.C.; Twin City Fire Insurance Company; Woodbury Financial Services, Inc. THE HARTFORD MUTUAL FUNDS [THIS PAGE IS INTENTIONALLY LEFT BLANK] [THIS PAGE IS INTENTIONALLY LEFT BLANK] Two documents are available that offer further information on The Hartford Mutual Funds: ANNUAL/SEMIANNUAL REPORT TO SHAREHOLDERS Additional information about the fund will be contained in the financial statements and portfolio holdings in the fund's annual and semi-annual reports. In the fund's annual report you will also find a discussion of the market conditions and investment strategies that will have significantly affected the fund's performance during the last fiscal year, as well as the auditor's report. Because the fund did not commence operations until January __, 2005, the fund has not yet delivered an annual or semi-annual report. STATEMENT OF ADDITIONAL INFORMATION (SAI) The SAI contains more detailed information on the fund. A current SAI has been filed with the Securities and Exchange Commission and is incorporated by reference into (which means it is legally a part of) this prospectus. To request a free copy of the current SAI or for shareholder inquiries or other information about the fund, please contact the fund at: BY MAIL: The Hartford Mutual Funds P.O. Box 64387 St. Paul, MN 55164-0387 (For overnight mail) The Hartford Mutual Funds 500 Bielenberg Drive Woodbury, MN 55125-1400 BY PHONE: 1-888-843-7824 ON THE INTERNET: www.hartfordinvestor.com Or you may view or obtain these documents from the SEC: IN PERSON: at the SEC's Public Reference Room in Washington, DC Information on the operation of the SEC's public reference room may be obtained by calling 1-202-942-8090. BY MAIL: Public Reference Section Securities and Exchange Commission Washington, DC 20549-0102 Requests which are made by mail require the payment of a duplicating fee to the SEC to obtain a document. ON THE INTERNET OR BY E-MAIL: Internet: (on the EDGAR Database on the SEC's internet site) www.sec.gov E-Mail: publicinfo@sec.gov Requests which are made by e-mail require the payment of a duplicating fee to the SEC to obtain a document. SEC FILE NUMBER: The Hartford Mutual Funds, Inc. 811-07589 STATEMENT OF ADDITIONAL INFORMATION THE HARTFORD MUTUAL FUNDS, INC. CLASS A, CLASS B, CLASS C AND CLASS Y SHARES THE HARTFORD SELECT MIDCAP GROWTH FUND P.O. Box 64387 St. Paul, MN 55164-0387 This Statement of Additional Information ("SAI") is not a prospectus but should be read in conjunction with the corresponding prospectus for the Fund and class thereof. A free copy of each prospectus is available upon request by writing to: The Hartford Mutual Funds, P. O. Box 64387, St. Paul, MN 55164-0387, or by calling 1-888-843-7824. Date of Prospectuses: January __, 2005 Date of Statement of Additional Information: January __, 2005
TABLE OF CONTENTS PAGE GENERAL INFORMATION............................................................. 1 INVESTMENT OBJECTIVES AND POLICIES.............................................. 1 FUND MANAGEMENT................................................................. 14 INVESTMENT MANAGEMENT ARRANGEMENTS.............................................. 25 PORTFOLIO TRANSACTIONS AND BROKERAGE............................................ 28 FUND EXPENSES................................................................... 29 DISTRIBUTION ARRANGEMENTS....................................................... 29 PURCHASE AND REDEMPTION OF SHARES............................................... 33 DETERMINATION OF NET ASSET VALUE................................................ 35 CAPITALIZATION AND VOTING RIGHTS................................................ 36 TAXES........................................................................... 37 PRINCIPAL UNDERWRITER........................................................... 42 CUSTODIAN....................................................................... 42 TRANSFER AGENT.................................................................. 42 INDEPENDENT AUDITORS............................................................ 42 OTHER INFORMATION............................................................... 42 PROXY VOTING POLICIES AND PROCEDURES............................................ 42 FINANCIAL STATEMENTS............................................................ 42 APPENDIX A...................................................................... A-1 APPENDIX B...................................................................... B-1
GENERAL INFORMATION The Hartford Mutual Funds, Inc. (the "Company") is an open-end management investment company consisting of thirty-six separate investment portfolios or mutual funds. This SAI relates to The Hartford Select MidCap Growth Fund (the "Fund"). The Company was organized as a Maryland corporation on March 21, 1996. The Company issues series of shares of stock for the Fund representing a fractional undivided interest in the Fund. The Fund issues shares in four different classes: Class A, Class B, Class C and Class Y. Class A, Class B and Class C shares are offered through one prospectus describing those classes. Class Y shares are offered through a separate prospectus describing that class. This SAI relates to Class A, Class B, Class C and Class Y shares. Hartford Investment Financial Services, LLC ("HIFSCO") is the investment manager and principal underwriter to the Fund. HIFSCO is an indirect wholly-owned subsidiary of The Hartford Financial Services Group, Inc. ("The Hartford"), a Connecticut financial services company with over $_____ billion in assets as of ________________, 2004. In addition, Chartwell Investment Partners, Goldman Sachs Asset Management, L.P. and Northern Capital Management, LLC (each a "sub-adviser", collectively the "sub-advisers") are sub-advisers to the Fund and provide the day-to-day investment management of the Fund. The Fund commenced operations on January __, 2005. The Hartford also sponsors a family of mutual funds that are primarily used as investment options for variable annuity contracts and variable life insurance contracts issued by Hartford Life Insurance Company ("Hartford Life") and its affiliates, for other insurance companies, and for certain retirement plans. HL Investment Advisors, LLC ("HL Advisors"), an affiliate of The Hartford, is the investment adviser to that family of funds. INVESTMENT OBJECTIVES AND POLICIES With respect to percentage restrictions on investments described in this SAI or in the prospectuses, if such percentage restrictions are adhered to at the time of investment, a later increase or decrease in such percentage resulting from a change in values of securities or amount of net assets is not a violation of any of such restrictions. A. FUNDAMENTAL RESTRICTIONS OF THE FUND The Fund has adopted the following fundamental investment restrictions which may not be changed without approval of a majority of the applicable Fund's outstanding voting securities. Under the Investment Company Act of 1940, as amended (the "1940 Act"), and as used in the prospectuses and this SAI, a "majority of the outstanding voting securities" means the approval of the lesser of (1) the holders of 67% or more of the outstanding shares of the Fund (or a class of the outstanding shares of the Fund) represented at a meeting if the holders of more than 50% of the outstanding shares of the Fund (or class) are present in person or by proxy or (2) the holders of more than 50% of the outstanding shares of the Fund (or of the class). The Fund has elected to be classified as a diversified series of an open-end management investment company. The investment objective and principal investment strategies of the Fund are set forth in the prospectuses. Set forth below are the fundamental investment restrictions and policies applicable to the Fund followed by the principal non-fundamental restrictions and policies applicable to the Fund. The Fund: 1. will not borrow money or issue any class of senior securities, except to the extent consistent with the Investment Company Act of 1940, as amended, and the rules and regulations thereunder, or as may otherwise be permitted from time to time by regulatory authority; 2. will not purchase the securities of any issuer (other than securities issued or guaranteed by the U.S. government or any of its agencies or instrumentalities) if, as a result, more than 25% of the Fund's total assets would be invested in the securities of companies whose principal business activities are in the same industry; 3. will not make loans, except to the extent consistent with the Investment Company Act of 1940, as amended, and the rules and regulations thereunder, or as may otherwise be permitted from time to time by regulatory authority; 4. will not act as an underwriter of securities of other issuers, except to the extent that, in connection with the disposition of portfolio securities, the Fund may be deemed an underwriter under applicable laws; 5. will not purchase or sell real estate unless acquired as a result of ownership of securities or other instruments, although it may purchase securities secured by real estate or interests therein, or securities issued by companies which invest in real estate or interests therein; and 6. will not purchase or sell commodities or commodities contracts, except that the Fund may purchase or sell financial futures contracts, options on financial futures contracts and futures contracts, forward contracts, and options with respect to foreign currencies, and may enter into swap transactions or other financial transactions of any kind. If the above percentage restrictions are adhered to at the time of investment, a later increase or decrease in such percentage resulting from a change in values of securities or amount of net assets is not a violation of any of the foregoing restrictions. B. NON-FUNDAMENTAL INVESTMENT RESTRICTIONS OF THE FUND The following restrictions are designated as non-fundamental and may be changed by the board of directors of the Fund without the approval of shareholders. The Fund may not: 1. Pledge, mortgage or hypothecate its assets, except to the extent required to secure permitted borrowings. This investment restriction shall not apply to any required segregated account, securities lending arrangements, reverse repurchase agreements or other assets in escrow and collateral arrangements with respect to margin for futures contracts and related options. 2. Purchase any securities on margin (except that the Fund may obtain such short-term credits as may be necessary for the clearance of purchases and sales of portfolio securities). The deposit or payment by the Fund of initial or maintenance margin in connection with futures contracts or related options transactions is not considered the purchase of a security on margin. 3. Purchase securities while outstanding borrowings exceed 5% of the Fund's total assets, except for temporary or emergency purposes. Reverse repurchase agreements, dollar rolls, securities lending, or other investments or transactions described in the Fund's registration statement are not deemed to be borrowings for purposes of this restriction. 4. Sell securities short except for short sales against the box. 5. Invest more than 20% of the value of its total assets in the securities of foreign issuers and non-dollar securities. 6. Invest more than 15% of the Fund's net assets in illiquid securities. 7. Enter into a stock index futures contract (by exercise of any option or otherwise) or acquire any options thereon, if immediately thereafter, the total of the initial margin deposits required with respect to all open futures positions, at the time such positions were established, plus the sum of the premiums paid for all unexpired options on stock index futures contracts would exceed 5% of the value of the Fund's total assets. 2 If the above percentage restrictions are adhered to at the time of investment, a later increase or decrease in such percentage resulting from a change in values of securities or amount of net assets is not a violation of any of the foregoing restrictions. C. NON-FUNDAMENTAL TAX RESTRICTIONS OF THE FUND The Fund must: 1. Maintain its assets so that, at the close of each quarter of its taxable year, (a) at least 50 percent of the fair market value of its total assets is comprised of cash, cash items, U.S. Government securities, securities of other regulated investment companies and other securities limited in respect of any one issuer to no more than 5 percent of the fair market value of the Fund's total assets and 10 percent of the outstanding voting securities of such issuer, (b) no more than 25 percent of the fair market value of its total assets is invested in the securities of any one issuer (other than U.S. Government securities and securities of other regulated investment companies) or of two or more issuers controlled by the Fund and engaged in the same, similar, or related trades or businesses. These tax-related limitations are subject to cure provisions under applicable tax laws and may be changed by the Fund's board of directors to the extent appropriate in light of changes to applicable tax law requirements. D. MISCELLANEOUS INVESTMENT STRATEGIES AND RISKS OF THE FUND The investment objective and principal investment strategies for the Fund are discussed in the Fund's prospectuses. A further description of certain investment strategies used by the Fund is set forth below. The percentage limits described in the sections below are based on market value and are determined as of the time securities are purchased. Certain descriptions in the prospectuses of the Fund and in this SAI of a particular investment practice or technique in which the Fund may engage or a financial instrument which the Fund may purchase are meant to describe the spectrum of investments that a subadviser, in its discretion, might, but is not required to, use in managing the Fund's portfolio assets in accordance with the Fund's investment objective, policies and restrictions. It is possible that certain types of financial instruments or techniques may not be available, permissible or effective for their intended purposes in all markets. MONEY MARKET INSTRUMENTS AND TEMPORARY INVESTMENT STRATEGIES The Fund may hold cash and invest in high quality money market instruments under appropriate circumstances as determined by the Fund's sub-advisers, subject to the overall supervision of HIFSCO. The Fund may invest up to 100% of its total assets in cash or money market instruments only for temporary defensive purposes. Money market instruments include, but are not limited to: (1) banker's acceptances; (2) obligations of governments (whether U.S. or foreign) and their agencies and instrumentalities; (3) short-term corporate obligations, including commercial paper, notes, and bonds; (4) other short-term debt obligations; (5) obligations of U.S. banks, foreign branches of U.S. banks (Eurodollars), U.S. branches and agencies of foreign banks (Yankee dollars), and foreign branches of foreign banks; (6) asset-backed securities; and (7) repurchase agreements. REPURCHASE AGREEMENTS A repurchase agreement is an agreement by which the seller of a security agrees to repurchase the security sold at a mutually agreed upon time and price. It may also be viewed as the loan of money by the Fund to the seller. The resale price by the Fund would be in excess of the purchase price, reflecting an agreed upon market interest rate. 3 The Fund is permitted to enter into fully collateralized repurchase agreements. The Company's board of directors has delegated to the sub-advisers the responsibility of evaluating the creditworthiness of the banks and securities dealers with which the Fund will engage in repurchase agreements. A sub-adviser will monitor such transactions to ensure that the value of underlying collateral will be at least equal at all times to the total amount of the repurchase obligation, including the accrued interest. If the seller defaults, the Fund could realize a loss on the sale of the underlying security to the extent that the proceeds of sale including accrued interest are less than the resale price provided in the agreement including interest. In the event the seller commences bankruptcy proceedings, a court may characterize the transaction as a loan. If the Fund has not perfected a security interest in the security, the Fund may be required to return the security to the seller's estate and be treated as an unsecured creditor. As an unsecured creditor, the Fund could lose some or all of the principal and interest involved in the transaction. REVERSE REPURCHASE AGREEMENTS The Fund may also enter into reverse repurchase agreements. Reverse repurchase agreements involve sales by the Fund of portfolio assets concurrently with an agreement by the Fund to repurchase the same assets at a later date at a fixed price. Reverse repurchase agreements carry the risk that the market value of the securities which the Fund is obligated to repurchase may decline below the repurchase price. A reverse repurchase agreement is viewed as a collateralized borrowing by the Fund. Borrowing magnifies the potential for gain or loss on the portfolio securities of the Fund and, therefore, increases the possibility of fluctuation in the Fund's net asset value. INFLATION-PROTECTED DEBT SECURITIES The Fund may invest in inflation-protected debt securities. Inflation-protected debt securities are fixed income securities whose principal value is periodically adjusted according to the rate of inflation. Two structures are common. The U.S. Treasury and some other issuers use a structure that accrues inflation into the principal value of the security. Most other issuers pay out the inflation accruals as part of a semiannual coupon. If the periodic adjustment rate measuring inflation falls, the principal value of inflation-protected debt securities will be adjusted downward, and consequently the interest payable on these securities (calculated with respect to a smaller principal amount) will be reduced. Repayment of the original security principal upon maturity (as adjusted for inflation) is guaranteed in the case of U.S. Treasury inflation-protected debt securities, even during a period of deflation. However, the current market value of the securities is not guaranteed, and will fluctuate. The Fund may also invest in other inflation related securities which may or may not provide a similar guarantee. If a guarantee of principal is not provided, the adjusted principal value of the security repaid at maturity may be less than the original principal. While these securities are expected to be protected from long-term inflationary trends, short-term increases in inflation may lead to decline in value. If interest rates rise due to reasons other than inflation (for example, due to changes in currency exchange rates), investors in these securities may not be protected to the extent that the increase is not reflected in the security's inflation measure. The periodic adjustment of U.S. inflation-protected debt securities is tied to the Consumer Price Index for Urban Consumers ("CPI-U"), which is calculated monthly by the U.S. Bureau of Labor Statistics. The CPI-U is an index of changes in the cost of living, made up of components such as housing, food, transportation and energy. Inflation-protected debt securities issued by a foreign government are generally adjusted to reflect a comparable inflation index, calculated by that government. There can be no assurance that the CPI-U or any foreign inflation index will accurately measure the real rate of inflation in the prices of goods and services. Moreover, there can be no assurance that the rate of inflation in a foreign country will be correlated to the rate of inflation in the United States. Any increase in the principal amount of an inflation-protected debt security will be considered taxable ordinary income, even though investors do not receive their principal until maturity. DEBT SECURITIES The Fund is permitted to invest in debt securities including: (1) securities issued or guaranteed as to principal or interest by the U.S. Government, its agencies or instrumentalities, (2) non-convertible debt securities issued or guaranteed by U.S. corporations or other issuers (including foreign issuers), (3) asset- 4 backed securities, (4) mortgage-related securities, including collateralized mortgage obligations ("CMO's"), (5) securities issued or guaranteed as to principal or interest by a foreign issuer, including supranational entities such as development banks, non-U.S. corporations, banks or bank holding companies, or other foreign issuers, and (6) commercial mortgage-backed securities. INVESTMENT GRADE DEBT SECURITIES The Fund is permitted to invest in debt securities rated within the four highest rating categories (e.g., "Aaa", "Aa", "A" or "Baa" by Moody's Investors Service, Inc. ("Moody's") or "AAA", "AA", "A" or "BBB" by Standard and Poor's Corporation ("S&P") (or, if unrated, securities of comparable quality as determined by a sub-adviser). These securities are generally referred to as "investment grade securities." Each rating category has within it different gradations or sub-categories. If the Fund is authorized to invest in a certain rating category, the Fund is also permitted to invest in any of the sub-categories or gradations within that rating category. If a security is downgraded to a rating category which does not qualify for investment, a sub-adviser will use its discretion on whether to hold or sell based upon its opinion on the best method to maximize value for shareholders over the long term. Debt securities carrying the fourth highest rating (e.g., "Baa" by Moody's and "BBB" by S&P), and unrated securities of comparable quality (as determined by a sub-adviser) are viewed to have adequate capacity for payment of principal and interest, but do involve a higher degree of risk than that associated with investments in debt securities in the higher rating categories and such securities lack outstanding investment characteristics and do have speculative characteristics. To the extent that the Fund invests in higher-grade securities, the Fund may not be able to avail itself of opportunities for higher income which may be available at lower grades. HIGH YIELD-HIGH RISK DEBT SECURITIES The Fund is permitted to invest up to [5]% of its total assets in fixed income securities rated as low as "C" by Moody's or "CC" by S&P or, if unrated, securities determined to be of comparable quality by a sub-adviser. Securities rated below investment grade are commonly referred to as "high yield-high risk debt securities" or "junk bonds". Each rating category has within it different gradations or sub-categories. For instance the "Ba" rating for Moody's includes "Ba3", "Ba2" and "Ba1". Likewise the S&P rating category of "BB" includes "BB+", "BB" and "BB-". If the Fund is authorized to invest in a certain rating category, the Fund is also permitted to invest in any of the sub-categories or gradations within that rating category. Descriptions of the debt securities ratings system, including their speculative characteristics attributable to each ratings category, are set forth in Appendix A to this SAI. These securities generally entail greater risk (including the possibility of default or bankruptcy of the issuer), involve greater volatility of price and risk to principal and income, and may be less liquid than securities in higher rating categories. Securities in the highest category below investment grade are considered to be of poor standing and predominantly speculative. These securities are considered speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligations. Accordingly, it is possible that these types of factors could, in certain instances, reduce the value of securities held by the Fund with a commensurate effect on the value of the Fund's shares. If a security is downgraded to a rating category which does not qualify for investment, a sub-adviser will use its discretion on whether to hold or sell based upon its opinion on the best method to maximize value for shareholders over the long term. MORTGAGE-RELATED SECURITIES The mortgage-related securities in which the Fund may invest include interests in pools of mortgage loans made by lenders such as savings and loan institutions, mortgage bankers, commercial banks and others. Pools of mortgage loans are assembled for sale to investors (such as the Fund) by various governmental, government-related and private organizations. The Fund may also invest in similar mortgage-related securities which provide funds for multi-family residences or commercial real estate properties. When interest rates rise, mortgage prepayment rates tend to decline, thus lengthening the life of a mortgage-related security and increasing the price volatility of that security, affecting the price volatility of the Fund's shares. The value of these securities may be significantly affected by interest rates, the market's perception of the issuers and the creditworthiness of the parties involved. These securities may also be subject to prepayment risk and the risk that the underlying loans may not be repaid. The yield characteristics of the mortgage securities differ from those of traditional debt securities. Among the major differences are that interest and principal payments are made more frequently on mortgage securities, usually monthly, and that principal may be prepaid at any time because the underlying mortgage loans or other assets generally permit prepayment at any time. The risks associated with prepayment and the rate at which prepayment may occur are influenced by a variety of economic, geographic, 5 demographic, social and other factors including interest rate levels, changes in housing needs, net equity built by mortgagors in the mortgaged properties, job transfers, and unemployment rates. If the Fund purchases these securities at a premium, a prepayment rate that is faster than expected will reduce yield to maturity, while a prepayment rate that is slower than expected will have the opposite effect of increasing yield to maturity. Conversely, if the Fund purchases these securities at a discount, faster than expected prepayments will increase, while slower than expected prepayments will reduce, yield to maturity. Amounts available for reinvestment are likely to be greater during a period of declining interest rates and, as a result, are likely to be reinvested at lower interest rates than during a period of rising interest rates. Accelerated prepayments on securities purchased by the Fund at a premium also impose a risk of loss of principal because the premium may not have been fully amortized at the time the principal is repaid in full. The mortgage securities in which the Fund invests differ from conventional bonds in that principal is paid back over the life of the mortgage securities rather than at maturity. As a result, the holder of the mortgage securities (e.g., the Fund ) receives monthly scheduled payments of principal and interest, and may receive unscheduled principal payments representing prepayments on the underlying mortgages. When the holder reinvests the payments and any unscheduled prepayments of principal it receives, it may receive a rate of interest which is lower than the rate on the existing mortgage securities. For this reason, mortgage securities are less effective than other types of U.S. Government securities as a means of "locking in" long-term interest rates. Mortgage-related securities may be composed of one or more classes and may be structured either as pass-through securities or collateralized debt obligations. Multiple-class mortgage-related securities are referred to herein as "CMOs." Some CMOs are directly supported by other CMOs, which in turn are supported by mortgage pools. Investors typically receive payments out of the interest and principal on the underlying mortgages. The portions of these payments that investors receive, as well as the priority of their rights to receive payments, are determined by the specific terms of the CMO class. CMOs involve special risk and evaluating them requires special knowledge. CMO classes may be specially structured in a manner that provides any of a wide variety of investment characteristics, such as yield, effective maturity and interest rate sensitivity. As market conditions change, however, and particularly during periods of rapid or unanticipated changes in market interest rates, the attractiveness of the CMO classes and the ability of the structure to provide the anticipated investment characteristics may be significantly reduced. These changes can result in volatility in the market value, and in some instances reduced liquidity, of the CMO class. Certain classes of CMOs and other mortgage-related securities are structured in a manner that makes them extremely sensitive to changes in prepayment rates. Interest-only ("IO") and principal-only ("PO") classes are examples of this. IOs are entitled to receive all or a portion of the interest, but none (or only a nominal amount) of the principal payments, from the underlying mortgage assets. If the mortgage assets underlying an IO experience greater than anticipated principal prepayments, then the total amount of interest payments allocable to the IO class, and therefore the yield to investors, generally will be reduced. In some instances, an investor in an IO may fail to recoup all of his or her initial investment, even if the security is government issued or guaranteed or is rated AAA or the equivalent. Conversely, PO classes are entitled to receive all or a portion of the principal payments, but none of the interest, from the underlying mortgage assets. PO classes are purchased at substantial discounts from par, and the yield to investors will be reduced if principal payments are slower than expected. Some IOs and POs, as well as other CMO classes, are structured to have special protections, however, normally are effective only within certain ranges of prepayment rates and thus will not protect investors in all circumstances. Inverse floating rate CMO classes also may be extremely volatile. These classes pay interest at a rate that decreases when a specified index of market rates increases. ASSET-BACKED SECURITIES The Fund may invest in asset-backed securities. The securitization techniques used for asset-backed securities are similar to those used for mortgage-related securities. The collateral for these securities has included home equity loans, automobile and credit card receivables, boat loans, computer leases, airplane leases, mobile home loans, recreational vehicle loans and hospital accounts receivables. The Fund may invest in these and other types of asset-backed securities that may be developed in the future. These securities may be subject to the risk of prepayment or default. Not all asset-backed securities have the benefit of a security interest in the underlying asset. Credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain 6 amounts owed, thereby reducing the balance due. The ability of an issuer of asset-backed securities to enforce its security interest in the underlying securities may be limited, and recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. EQUITY SECURITIES The Fund may invest in equity securities. Equity securities include common stock, preferred stock, securities convertible into common or preferred stock and warrants or rights to acquire common stock, including options. In addition, the Fund may invest in securities such as bonds, debentures and corporate notes which are convertible into common stock at the option of the holder. Equity securities are subject to financial and market risks and can be expected to fluctuate in value. SMALL CAPITALIZATION SECURITIES The Fund may invest in equity securities (including securities issued in initial public offerings) of companies with smaller market capitalizations. Because the issuers of small capitalization securities tend to be smaller or less well-established companies, they may have limited product lines, market share or financial resources, may have less historical data with respect to operations and management and may be more dependent on a limited number of key employees. As a result, small capitalization securities are often less marketable and experience a higher level of price volatility than securities of larger or more well-established companies. Small capitalization securities may be more likely to be offered in initial public offerings. Because securities issued in initial public offerings are being offered to the public for the first time, the market for such securities may be inefficient and less liquid. FOREIGN ISSUERS AND NON-DOLLAR SECURITIES Foreign issuers include (1) companies organized outside of the United States, (2) foreign governments and agencies or instrumentalities of foreign governments and (3) issuers whose economic fortunes and risks are primarily linked with markets outside the United States. Certain companies organized outside the United States may not be deemed to be foreign issuers if the issuer's economic fortunes and risks are primarily linked with U.S. markets. Non-dollar securities are securities denominated or quoted in foreign currency or paying income in foreign currency. The Fund is permitted to invest a portion of its assets in securities of foreign issuers and non-dollar securities, including American Depositary Receipts ("ADRs") and Global Depositary Receipts ("GDRs"). ADRs are certificates issued by a U.S. bank or trust company and represent the right to receive securities of a foreign issuer deposited in a domestic bank or non-U.S. branch of a U.S. bank. ADRs are traded on a U.S. securities exchange, or in an over-the-counter market, and are denominated in U.S. dollars. GDRs are certificates issued globally and evidence a similar ownership arrangement. GDRs are traded on foreign securities exchanges and are denominated in foreign currencies. The value of an ADR or a GDR will fluctuate with the value of the underlying security, will reflect any changes in exchange rates and otherwise will involve risks associated with investing in foreign securities. When selecting securities of foreign issuers and non-dollar securities, a sub-adviser will evaluate the economic and political climate and the principal securities markets of the country in which an issuer is located. The Fund may invest in debt exchangeable for common stock, debt or equity linked notes and similar linked securities (e.g., zero-strike warrants ("LNs")), which are derivative securities typically issued by a financial institution or special purpose entity the performance of which depends on the performance of a corresponding foreign security or index. Upon redemption or maturity, the principal amount or redemption amount is payable based on the price level of the linked security or index at the time of redemption or maturity, or is exchanged for corresponding shares of common stock. LNs are generally subject to the same risks as direct holdings of securities of foreign issuers and non-dollar securities, including currency risk and the risk that the amount payable at maturity or redemption will be less than the principal amount of a note because the price of the linked security or index has declined. Moreover, LNs are subject to counterparty risk, which is the risk that the company issuing an LN may fail to pay the full amount due at maturity or redemption. The Fund may also have difficulty disposing of LNs because there may be restrictions on redemptions and there may be no market or only a thin trading market in such securities. The Fund may invest up to 20% of its total assets in the securities of foreign issuers and non-dollar securities. Investing in securities of foreign issuers involves considerations and potential risks not typically associated with investing in obligations issued by U.S. issuers. Less information may be available about foreign issuers compared with U.S. issuers. For example, foreign issuers generally are not subject to uniform accounting, auditing 7 and financial reporting standards or to other regulatory practices and requirements comparable to those applicable to U.S. issuers. In addition, the values of non-dollar securities are affected by changes in currency rates or exchange control regulations, restrictions or prohibition on the repatriation of foreign currencies, application of foreign tax laws, including withholding taxes, changes in government administration or economic or monetary policy (in the U.S. or outside the U.S.) or changed circumstances in dealings between nations. Costs are also incurred in connection with conversions between various currencies. Investing in foreign government debt securities exposes the Fund to the direct or indirect consequences of political, social or economic changes in the developing and emerging countries that issue the securities. The ability and willingness of sovereign obligors in developing and emerging countries or the governmental authorities that control repayment of their external debt to pay principal and interest on such debt when due may depend on general economic, social and political conditions within the relevant country. Countries such as those in which the Fund may invest have historically experienced, and may continue to experience, high rates of inflation, high interest rates, exchange rate trade difficulties and unemployment. Some of these countries are also characterized by political uncertainty or instability. Additional factors which may influence the ability or willingness to service debt include, but are not limited to, a country's cash flow situation, the availability of sufficient foreign exchange on the date a payment is due, the relative size of its debt service burden to the economy as a whole, and its government's policy towards the IMF, the World Bank and other international agencies. From time to time, the Fund may invest up to [___]% of its total assets in securities of issuers located in countries with emerging economies or securities markets. Compared to the United States and other developed countries, developing countries may have relatively unstable governments, economies based on only a few industries, and securities markets that are less liquid and trade a small number of securities. Prices in these markets tend to be volatile and, in the past, securities in these countries have offered greater potential for gain (as well as loss) than securities of companies located in developed countries. CURRENCY TRANSACTIONS The Fund may engage in currency transactions to hedge, directly or indirectly, the value of portfolio securities denominated in particular currencies against fluctuations in relative value. Currency transactions include forward currency contracts, currency swaps, exchange-listed and over-the-counter ("OTC") currency futures contracts and options thereon and exchange listed and OTC options on currencies. Forward currency contracts involve a privately negotiated obligation to purchase or sell a specific currency at a future date, which may be any fixed number of days from the date of the contract agreed upon by the parties, at a price set at the time of the contract. Currency swaps are agreements to exchange cash flows based on the notional difference between or among two or more currencies. See "Swap Agreements." The use of currency transactions to protect the value of the Fund's assets against a decline in the value of a currency does not eliminate potential losses arising from fluctuations in the value of the Fund's underlying securities. Further, the Fund may enter into currency transactions only with counterparties that a sub-adviser deems to be creditworthy. The Fund may also enter into options and futures contracts relative to foreign currency to hedge against fluctuations in foreign currency rates. See "Options and Futures Contracts" for a discussion of risk factors relating to foreign currency transactions including options and futures contracts related thereto. OPTIONS AND FUTURES CONTRACTS In seeking to protect against the effect of changes in equity market values, currency exchange rates or interest rates that are adverse to the present or prospective position of the Fund, for cash flow management, and, to a lesser extent, to enhance returns, the Fund may employ certain hedging, income enhancement and risk management techniques, including the purchase and sale of options contracts, futures contracts and options on futures contracts, any of which may involve equity and debt securities and foreign currencies, aggregates of equity and debt securities, indices of prices of equity and debt securities and other financial indices or instruments. The Fund may also invest in futures contracts and options thereon with respect to interest rates and may enter into options on swap agreements. The Fund's ability to engage in these practices may be limited by tax considerations and certain other legal considerations. 8 The Fund may write covered options and purchase put and call options on individual securities as a partial hedge against an adverse movement in the security and in circumstances consistent with the objective and policies of the Fund. This strategy limits potential capital appreciation in the portfolio securities subject to the put or call option. The Fund may also write covered put and call options and purchase put and call options on foreign currencies to hedge against the risk of foreign exchange rate fluctuations on non-dollar securities they hold or intend to purchase. For example, if the Fund enters into a contract to purchase non-dollar securities, it could effectively establish the maximum U.S. dollar cost of the securities by purchasing call options on the appropriate currency. Similarly, if the Fund held non-dollar securities and anticipated a decline in the value of that currency against the U.S. dollar, the Fund could hedge against such a decline by purchasing a put option on the foreign currency involved. Aggregates are composites of equity or debt securities that are not tied to a commonly known index. An index is a measure of the value of a group of securities or other interests. An index assigns relative values to the securities included in that index, and the index fluctuates with changes in the market value of those securities. The Fund may purchase put and call options and write covered put and call options on aggregates of equity and debt securities, and may enter into futures contracts and options thereon for the purchase or sale of aggregates of equity and debt securities, indices of equity and debt securities and other financial indices or instruments. The Fund may write covered straddles consisting of a combination of a call and a put written on the same underlying security. A straddle will be covered when sufficient assets are deposited to meet the Fund's immediate obligations. The Fund may use the same liquid assets to cover both the call and put options where the exercise price of the call and put are the same, or the exercise price of the call is higher than that of the put. In such cases, the Fund will also segregate or designate on their books liquid assets equivalent to the amount, if any, by which the put is "in the money." The Fund may write or purchase put and call swap options. A swap option is a contract that gives a counterparty the right (but not the obligation) in return for payment of a premium, to enter into a new swap agreement or to shorten, extend, cancel or otherwise modify an existing swap agreement, at some designated future time on specified terms. The Fund may only write covered options. See "Asset Coverage" below. A futures contract is an agreement between two parties to buy and sell a security or financial instrument for a set price on a future date. These contracts are traded on exchanges, so that, in most cases, either party can close out its position on the exchange for cash, without delivering the security or financial instrument. An option on a futures contract gives the holder of the option the right to buy or sell a position in a futures contract to the writer of the option, at a specified price and on or before a specified expiration date. The Fund may invest in futures contracts and options thereon ("futures options") with respect to, but not limited to, equity and debt securities and foreign currencies, aggregates of equity and debt securities, interest rates, and indices of prices of equity and debt securities and other financial indices or instruments. The Fund may purchase or sell foreign currency futures contracts, and write put and call options and purchase put and call options on such futures contracts. For example, the Fund may use foreign currency futures contracts when it anticipates a general weakening of the foreign currency exchange rate that could adversely affect the market values of the Fund's non-dollar securities holdings. In this case, the sale of futures contracts on the underlying currency may reduce the risk of a reduction in market value caused by foreign currency variations and, by so doing, provide an alternative to the liquidation of securities positions in the Fund and resulting transaction costs. When the Fund anticipates a significant foreign exchange rate increase while intending to invest in a non-dollar security, the Fund may purchase a foreign currency futures contract to hedge or partially hedge against a rise in foreign exchange rates pending completion of the anticipated transaction. Such a purchase of a futures contract would serve as a temporary measure to protect the Fund against any rise in the foreign exchange rate that may add additional costs to acquiring the non-dollar security. 9 The Fund similarly may use futures contracts on equity and debt securities to hedge against fluctuations in the value of securities it owns or expects to acquire. Futures contracts on individual securities are regulated as both securities and as futures contracts, and are subject to higher margin requirements than other kinds of futures contracts. Because these contracts relate to the securities of a single issuer, they can be expected to be subject to greater price volatility than futures contracts that relate to a diversified group of securities represented in an aggregate or an index. The volume, breadth, efficiency and other attributes may be limited. The Fund's use of these kind of futures contracts will depend to a large degree on how this market develops. The Fund may purchase call or put options on foreign currency futures contracts to obtain a fixed foreign exchange rate at limited risk. The Fund may purchase a call option on a foreign currency futures contract to hedge against a rise in the foreign exchange rate while intending to invest in a non-dollar security of the same currency. The Fund may purchase put options on foreign currency futures contracts to hedge against a decline in the foreign exchange rate or the value of its non-dollar securities. The Fund may write a call option on a foreign currency futures contract as a partial hedge against the effects of declining foreign exchange rates on the value of non-dollar securities and in circumstances consistent with the Fund's investment objectives and policies. The Fund may write covered straddles consisting of a call and a put written on the same underlying futures contract. A straddle will be covered when sufficient assets are deposited to meet the Fund's immediate obligations. The Fund may use the same liquid assets to cover both the call and put options where the exercise price of the call and put are the same, or the exercise price of the call is higher than that of the put. In such cases, the Fund will also segregate or designate on its books liquid assets equivalent to the amount, if any, by which the put is "in the money." Options on indices are settled in cash, not in delivery of securities. The exercising holder of an index option receives, instead of a security, cash equal to the difference between the closing price of the securities index and the exercise price of the option. To the extent that the Fund enters into futures contracts, options on futures contracts and options on foreign currencies that are traded on an exchange regulated by the Commodities Futures Trading Commission ("CFTC"), in each case that are not for "bona fide hedging" purposes (as defined by regulations of the CFTC), the aggregate initial margin and premiums required to establish those positions may not exceed 5% of the Fund's net asset value, after taking into account the unrealized gains and unrealized losses on any such contracts. However, options which are currently exercisable may be excluded in computing the 5% limit. Although the Fund may not employ all or any of the foregoing strategies, its use of options, futures and options thereon and forward currency contracts (as described under "Currency Transactions") would involve certain investment risks and transaction costs to which it might not be subject were such strategies not employed. Such risks include: (1) dependence on the ability of a sub-adviser to predict movements in the prices of individual securities, fluctuations in the general securities markets or market sections and movements in interest rates and currency markets, (2) imperfect correlation between movements in the price of the securities or currencies hedged or used for cover, (3) the fact that skills and techniques needed to trade options, futures contracts and options thereon or to use forward currency contracts are different from those needed to select the securities in which the Fund invests, (4) lack of assurance that a liquid secondary market will exist for any particular option, futures contract, option thereon or forward contract at any particular time, which may affect the Fund's ability to establish or close out a position, (5) possible impediments to effective portfolio management or the ability to meet current obligations caused by the segregation of a large percentage of the Fund's assets to cover its obligations, and (6) the possible need to defer closing out certain options, futures contracts, options thereon and forward contracts in order to continue to qualify as a "regulated investment company" for tax purposes. In the event that the anticipated change in the price of the securities or currencies that are the subject of such a strategy does not occur, the Fund may have been in a better position had it not used such a strategy. SWAP AGREEMENTS The Fund may enter into currency swaps, interest rate swaps, swaps on specific securities, and other types of swap agreements such as caps, collars, floors and credit derivatives and options thereon. In a typical interest rate swap, one party agrees to make regular payments equal to a floating interest rate multiplied by a "notional principal amount," in return for payments equal to a fixed rate multiplied by the same amount, for a specified period of time. If a swap agreement provides for payments in different currencies, the parties 10 might agree to exchange the notional principal amount as well. Swaps may also depend on other prices or rates, such as the value of an index or mortgage prepayment rates. In a typical cap or floor agreement, one party agrees to make payments only under specified circumstances, usually in return for payment of a fee by the other party. For example, the buyer of an interest rate cap obtains the right to receive payments to the extent that a specified interest rate exceeds an agreed-upon level, while the seller of an interest rate floor is obligated to make payments to the extent that a specified interest rate falls below an agreed-upon level. An interest rate collar combines elements of buying a cap and selling a floor. The Fund may enter into event linked swaps, including credit default swaps. The credit default swap market allows the Fund to manage credit risk through buying and selling credit protection on specific names or a basket of names. The transactions are documented through swap documents. A "buyer" of credit protection agrees to pay a counterparty to assume the credit risk of an issuer upon the occurrence of certain events. The "seller" of credit protection receives a premium and agrees to assume the credit risk of an issuer upon the occurrence of certain events. Swap agreements will tend to shift the Fund's investment exposure from one type of investment to another. For example, if the Fund agreed to exchange floating rate payments for fixed rate payments, the swap agreement would tend to decrease the Fund's exposure to rising interest rates. Caps and floors have an effect similar to buying or writing options. Depending on how they are used, swap agreements may increase or decrease the overall volatility of the Fund's investments and its share price and yield. The Fund usually enters into interest rate swaps on a net basis. The net amount of the excess, if any, of the Fund's obligations over its entitlement with respect to each interest rate swap will be covered by an amount consisting of designated liquid assets having an aggregate net asset value at least equal to the accrued excess. If the Fund enters into a swap on other than a net basis, the Fund will designate the full amount of the Fund's obligations under each such swap. The Fund may enter into swaps, caps, collars and floors with member banks of the Federal Reserve System, members of the New York Stock Exchange or other entities determined by a sub-adviser be creditworthy. If a default occurs by the other party to such transaction, the Fund will have contractual remedies pursuant to the agreements related to the transaction but such remedies may be subject to bankruptcy and insolvency laws which could affect the Fund's rights as a creditor. The swap market has grown substantially in recent years with a large number of banks and financial services firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid. Caps, collars and floors are more recent innovations and they are less liquid than swaps. There can be no assurance, however, that the Fund will be able to enter into interest rate swaps or to purchase interest rate caps, collars or floors at prices or on terms a sub-adviser, as appropriate, believes are advantageous to the Fund. In addition, although the terms of interest rate swaps, caps, collars and floors may provide for termination, there can be no assurance that the Fund will be able to terminate an interest rate swap or to sell or offset interest rate caps, collars or floors that it has purchased. Interest rate swaps, caps, collars and floors are considered by the Securities and Exchange Commission ("SEC") to be illiquid. The successful utilization of hedging and risk management transactions requires skills different from those needed in the selection of the Fund's portfolio securities and depends on a sub-adviser's ability to predict correctly the direction and degree of movements in interest rates. Although the Fund believes that use of the hedging and risk management techniques described above will benefit the Fund, if a sub-adviser's judgment about the direction or extent of the movement in interest rates is incorrect, the Fund's overall performance would be worse than if it had not entered into any such transactions. For example, if the Fund had purchased an interest rate swap or an interest rate floor to hedge against its expectation that interest rates would decline but instead interest rates rose, such Fund would lose part or all of the benefit of the increased payments it would receive as a result of the rising interest rates because it would have to pay amounts to its counterparties under the swap agreement or would have paid the purchase price of the interest rate floor. ILLIQUID INVESTMENTS The Fund is permitted to invest in illiquid securities or other illiquid investments. The Fund will not, however, acquire illiquid securities or investments if 15% of its net assets would consist of such securities or investments. Illiquid investments are ones that may not be sold or disposed of in the ordinary course of 11 business within seven days at approximately the price used to determine the Fund's net asset value. The Fund may not be able to sell illiquid securities or other investments when a sub-adviser considers it desirable to do so or may have to sell such securities or other investments at a price that is lower than the price that could be obtained if the securities or other investments were more liquid. A sale of illiquid securities or investments may require more time and may result in higher dealer discounts and other selling expenses than does the sale of those that are liquid. Illiquid securities also may be more difficult to value due to the lack of reliable market quotations for such securities or investments, and investments in them may have an adverse impact on the Fund's net asset value. In addition, issuers of restricted securities may not be subject to the disclosure requirements and other investor protection requirements that would be applicable if their securities were publicly traded. The Fund may purchase certain restricted securities (known as Rule 144A securities) that can be resold to institutions and which may be determined to be liquid pursuant to policies and guidelines established by the Company's board of directors. Under current interpretations of the SEC Staff, the following types of investments in which the Fund may invest are considered illiquid: (1) repurchase agreements maturing in more than seven days, (2) certain restricted securities (securities whose public resale is subject to legal or contractual restrictions), (3) option contracts, with respect to specific securities, not traded on a national securities exchange that are not readily marketable, and (4) any other securities or investments in which the Fund may invest that are not readily marketable. WHEN-ISSUED AND DELAYED-DELIVERY SECURITIES The Fund is permitted to purchase or sell securities on a when-issued or delayed-delivery basis. When-issued or delayed-delivery transactions arise when securities are purchased or sold with payment and delivery taking place in the future in order to secure what is considered to be an advantageous price and yield at the time of entering into the transaction. While the Fund generally purchases securities on a when-issued basis with the intention of acquiring the securities, the Fund may sell the securities before the settlement date if a sub-adviser deems it advisable. Distributions attributable to any gains realized on such a sale would be taxable to shareholders. At the time the Fund makes the commitment to purchase securities on a when-issued basis, it records the transaction and thereafter reflects the value, each day, of the security in determining the net asset value of the Fund. At the time of delivery of the securities, the value may be more or less than the purchase price. REITs The Fund may invest in real estate investment trusts ("REITs"), which are pooled investment vehicles that invest primarily in income-producing real estate or real estate related loans or interests. Like regulated investment companies such as the Fund, REITs are not taxed on income distributed to shareholders provided they comply with several requirements of the Internal Revenue Code of 1986, as amended (the "Code"). By investing in a REIT, the Fund will indirectly bear its proportionate share of any expenses paid by the REIT in addition to the expenses of the Fund. Investing in REITs involves certain risks. A REIT may be affected by changes in the value of the underlying property owned by such REIT or by the quality of any credit extended by the REIT. REITs are dependent on management skills, are not diversified (except to the extent the Code requires), and are subject to the risks of financing projects. REITs are subject to heavy cash flow dependency, default by borrowers, self-liquidation, the possibilities of failing to qualify for the exemption from tax for distributed income under the Code and failing to maintain their exemptions from the 1940 Act. REITs are also subject to interest rate risks. LENDING PORTFOLIO SECURITIES Subject to its investment restrictions, the Fund may lend its portfolio securities to broker-dealers and other institutions as a means of earning interest income. The borrower is required to deposit as collateral and maintain in a segregated account, liquid securities that at all times will be at least equal to 100% of the market value of the loaned securities. Subject to guidelines approved by the Fund's board of directors, the Fund may use or invest any cash collateral at its own risk and for its own benefit. While the securities are on loan, the borrower will pay the respective Fund any income accruing thereon. Delays or losses could result if a borrower of portfolio securities becomes bankrupt or defaults on its obligation to return the loaned securities. The Fund may lend securities only if: (1) each loan is fully secured by appropriate collateral at all times, and (2) the value of all securities loaned by the Fund is not more than 33.33% of the Fund's total assets taken at the time of the loan (including collateral received in connection with any loans). 12 ASSET COVERAGE To the extent required by SEC guidelines, the Fund will only engage in transactions that expose it to an obligation to another party if it owns either (1) an offsetting position for the same type of financial asset, or (2) cash or liquid securities, designated on the Fund's books or held in a segregated account, with a value sufficient at all times to cover its potential obligations not covered as provided in (1). Assets used as offsetting positions, designated on the Fund's books, or held in a segregated account cannot be sold while the position(s) requiring cover is open unless replaced with other appropriate assets. As a result, the commitment of a large portion of assets to be used as offsetting positions or to be designated or segregated in such a manner could impede portfolio management or the ability to meet redemption requests or other current obligations. BORROWING The Fund may borrow money to the extent set forth under its investment restrictions. The Fund does not intend to borrow for leverage purposes, except as may be set forth under its investment restrictions. Interest paid on borrowings will decrease the net earnings of the Fund and will not be available for investment. 13 FUND MANAGEMENT The Company has a board of directors, who elect officers who are responsible for the day-to-day operations of the Fund and who execute policies formulated by the directors. The following tables set forth various information about the directors and officers of the Company. The first table relates to those directors who are deemed not to be "interested persons" of the Company, as that term is defined in the 1940 Act (i.e., "non-interested directors"), while the second table provides information about the Company's "interested" directors and the Company's officers. [TO BE UPDATED.] NON-INTERESTED DIRECTORS
NUMBER OF PORTFOLIOS TERM OF IN FUND POSITION OFFICE* AND COMPLEX OTHER HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS NAME, AGE AND ADDRESS THE COMPANY TIME SERVED PAST 5 YEARS DIRECTOR HELD BY DIRECTOR -------------------------------------------------------------------------------------------------------------------------------- LYNN S. BIRDSONG Director Since 2003 From 1979 to 2002, Mr. Birdsong 76 N/A (age 57) was a managing director of Zurich c/o Hartford Mutual Funds Scudder Investments, an P.O. Box 2999 investment management firm. In Hartford, CT 06104-2999 2003, Mr. Birdsong became an independent director of the Atlantic Whitehall Funds and The Japan Fund; during his employment with Scudder, he was an interested director of The Japan Fund. Since 1981, Mr. Birdsong has been a partner in Birdsong Company, an advertising specialty firm. He is also a Director of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. WINIFRED E. COLEMAN Director Since 1996 Ms. Coleman has served as 76 N/A (age 71) President of Saint Joseph College c/o Hartford Mutual Funds since 1991 and President of P.O. Box 2999 Cashel House, Ltd. (retail) since Hartford, CT 06104-2999 1985. She is also a Director of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc.
14 NON-INTERESTED DIRECTORS
NUMBER OF PORTFOLIOS TERM OF IN FUND POSITION OFFICE* AND COMPLEX OTHER HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS NAME, AGE AND ADDRESS THE COMPANY TIME SERVED PAST 5 YEARS DIRECTOR HELD BY DIRECTOR -------------------------------------------------------------------------------------------------------------------------------- DR. ROBERT M. GAVIN Chairman of Since 2002 Dr. Gavin is an educational 76 N/A (age 63) the Board consultant. Prior to September 1, c/o Hartford Mutual Funds and Director 2001, he was President of P.O. Box 2999 Cranbrook Education Community; Hartford, CT 06104-2999 and prior to July 1996, he was President of Macalester College, St. Paul, Minnesota. He is also a Director and Chairman of the Board of Directors of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. DUANE E. HILL Director Since 2001 Mr. Hill is Partner Emeritus and 76 N/A (age 58) a founding partner of TSG Capital c/o Hartford Mutual Funds Group, a private equity P.O. Box 2999 investment firm that serves as Hartford, CT 06104-2999 sponsor and lead investor in leveraged buyouts of middle market companies. Mr. Hill is also a Partner of TSG Ventures L.P., a private equity investment company that invests primarily in minority-owned small businesses. He is also a Director of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. PHILLIP O. PETERSON Director Since 2002 Mr. Peterson is a mutual fund 76 N/A (age 59) industry consultant. He was a c/o Hartford Mutual Funds partner of KPMG LLP until July P.O. Box 2999 1999. In January 2004, Mr. Hartford, CT 06104-2999 Peterson was appointed independent president of the Strong Mutual Funds. He is also a Director of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc.
15 NON-INTERESTED DIRECTORS
NUMBER OF PORTFOLIOS TERM OF IN FUND POSITION OFFICE* AND COMPLEX OTHER HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS NAME, AGE AND ADDRESS THE COMPANY TIME SERVED PAST 5 YEARS DIRECTOR HELD BY DIRECTOR -------------------------------------------------------------------------------------------------------------------------------- MILLARD H. PRYOR, JR. Director Since 1996 Mr. Pryor has served as Managing 76 Mr. Pryor is a (age 71) Director of Pryor & Clark Company Director of c/o Hartford Mutual Funds (real estate investment), Infodata P.O. Box 2999 Hartford, Connecticut, since June Systems, Inc. Hartford, CT 06104-2999 1992. He is also a Director of (software The Hartford Mutual Funds II, company) and Inc., The Hartford Income Shares CompuDyne Fund, Inc., Hartford Series Fund, Corporation Inc. and Hartford HLS Series Fund (security II, Inc. products and services).
*Term of Office: Each director may serve until his or her successor is elected and qualifies. 16 OFFICERS AND INTERESTED DIRECTORS
NUMBER OF PORTFOLIOS TERM OF IN FUND POSITION OFFICE* AND COMPLEX OTHER HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS NAME, AGE AND ADDRESS THE COMPANY TIME SERVED PAST 5 YEARS DIRECTOR HELD BY DIRECTOR -------------------------------------------------------------------------------------------------------------------------------- THOMAS M. MARRA** Director Since 2002 Mr. Marra is President and Chief 76 Mr. Marra is a (age 45) Operating Officer of Hartford member of the c/o Hartford Mutual Funds Life, Inc. He is also a member of Board of P.O. Box 2999 the Board of Directors and a Directors of Hartford, CT 06104-2999 member of the The Hartford Office of the Chairman for The Financial Hartford Financial Services Services Group, Group, Inc. ("The Hartford"), the Inc. parent company of Hartford Life. Mr. Marra was named President of Hartford Life in 2001 and COO in 2000, and served as Director of Hartford Life's Investment Products Division from 1998 to 2000. He was head of the company's Individual Life and Annuities Division from 1994 to 1998 after being promoted to Senior Vice President in 1994 and to Executive Vice President in 1996. Mr. Marra is also a Managing Member and President of Hartford Investment Financial Services, LLC ("HIFSCO") and HL Investment Advisors, LLC ("HL Advisors"). He is also a Director of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc.
17 OFFICERS AND INTERESTED DIRECTORS
NUMBER OF PORTFOLIOS TERM OF IN FUND POSITION OFFICE* AND COMPLEX OTHER HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS NAME, AGE AND ADDRESS THE COMPANY TIME SERVED PAST 5 YEARS DIRECTOR HELD BY DIRECTOR -------------------------------------------------------------------------------------------------------------------------------- LOWNDES A. SMITH** Director Since 1996 Mr. Smith served as Vice Chairman 76 Mr. Smith is a (age 64) of The Hartford from February Director of c/o Hartford Mutual Funds 1997 to January 2002, as White Mountains P.O. Box 2999 President and Chief Executive Insurance Hartford, CT 06104-2999 Officer of Hartford Life, Inc. Group, Ltd. from February 1997 to January 2002, and as President and Chief Operating Officer of The Hartford Life Insurance Companies from January 1989 to January 2002. Mr. Smith is also a Director of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. DAVID M. ZNAMIEROWSKI** President Since 1999 Mr. Znamierowski currently serves 57 N/A (age 43) and Director as President of Hartford c/o Hartford Mutual Funds Investment Management Company P.O. Box 2999 ("Hartford Investment Hartford, CT 06104-2999 Management"), Senior Vice President for Hartford Life, Inc., and Senior Vice President and Chief Investment Officer for Hartford Life Insurance Company. Mr. Znamierowski is also a Managing Member and Senior Vice President of HIFSCO and HL Advisors. Mr. Znamierowski is Group Senior Vice President and Chief Investment Officer for The Hartford. In addition, he serves as President and Director of Hartford Series Fund, Inc. and President of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc. and Hartford HLS Series Fund II, Inc.
18 OFFICERS AND INTERESTED DIRECTORS
NUMBER OF PORTFOLIOS TERM OF IN FUND POSITION OFFICE* AND COMPLEX OTHER HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS NAME, AGE AND ADDRESS THE COMPANY TIME SERVED PAST 5 YEARS DIRECTOR HELD BY DIRECTOR -------------------------------------------------------------------------------------------------------------------------------- ROBERT W. BELTZ, JR. Vice Since 2002 Mr. Beltz currently serves as N/A N/A (age 54) President Vice President, Securities 500 Bielenberg Drive Operations of Hartford Woodbury, MN 55125 Administrative Services Company ("HASCO"). Since December 2001, he has served as Assistant Vice President of Hartford Life Insurance Company. In addition, he is a Vice President of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. KEVIN J. CARR Vice Since 1996 Mr. Carr has served as The N/A N/A (age 49) President Hartford's Assistant General c/o Hartford Mutual Funds and Counsel since 1999, Counsel since P.O. Box 2999 Secretary November 1996 and Associate Hartford, CT 06104-2999 Counsel since November 1995. Mr. Carr is also Vice President and Assistant Secretary of HL Advisors and HIFSCO and Assistant Secretary of Hartford Investment Management. He is also Vice President and Secretary of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc.
19 OFFICERS AND INTERESTED DIRECTORS
NUMBER OF PORTFOLIOS TERM OF IN FUND POSITION OFFICE* AND COMPLEX OTHER HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS NAME, AGE AND ADDRESS THE COMPANY TIME SERVED PAST 5 YEARS DIRECTOR HELD BY DIRECTOR -------------------------------------------------------------------------------------------------------------------------------- WILLIAM H. DAVISON, JR. Vice Since 2002 Mr. Davison is a Managing N/A N/A (age 47) President Director and Director of the c/o Hartford Mutual Funds Funds Management Group of P.O. Box 2999 Hartford Investment Management. Hartford, CT 06104-2999 Mr. Davison is a Senior Vice President of HIFSCO and HL Advisors. In addition, he serves as a Vice President of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. TAMARA L. FAGELY Vice Since 2002 Ms. Fagely has been Vice N/A N/A (age 46) President, President of HASCO since 1998. 500 Bielenberg Drive Controller Prior to 1998, she was Second Woodbury, MN 55125 and Treasurer Vice President of HASCO. Since December 2001, she has served as Assistant Vice President of Hartford Life Insurance Company. In addition, she is Controller of HIFSCO and Vice President, Controller and Treasurer of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. BRUCE FERRIS Vice Since 2002 Mr. Ferris serves as Senior Vice N/A N/A (age 48) President President and a Director of Sales c/o Hartford Mutual Funds and Marketing in the Investment P.O. Box 2999 Products Division of Hartford Hartford, CT 06104-2999 Life Insurance Company. He is also a Managing Member of HL Advisors. In addition, Mr. Ferris is Vice President of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc.
20 OFFICERS AND INTERESTED DIRECTORS
NUMBER OF PORTFOLIOS TERM OF IN FUND POSITION OFFICE* AND COMPLEX OTHER HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS NAME, AGE AND ADDRESS THE COMPANY TIME SERVED PAST 5 YEARS DIRECTOR HELD BY DIRECTOR -------------------------------------------------------------------------------------------------------------------------------- MARY JANE FORTIN Vice Since 2003 Ms. Fortin is Senior Vice N/A N/A (age 39) President President and Director of Mutual c/o Hartford Mutual Funds Funds and 529 Programs for P.O. Box 2999 Hartford Life. In addition, she Hartford, CT 06104-2999 is a Vice President of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. Previously, Ms. Fortin served as Senior Vice President and Chief Accounting Officer of Hartford Life. She joined Hartford Life in 1997. GEORGE R. JAY Vice Since 1996 Mr. Jay serves as Assistant Vice N/A N/A (age 52) President President of Hartford Life c/o Hartford Mutual Funds Insurance Company's Equity P.O. Box 2999 Products Department. He is also Hartford, CT 06104-2999 Controller of HL Advisors and Vice President of Hartford Series Fund, Inc., Hartford HLS Series Fund II, Inc., The Hartford Mutual Funds II, Inc. and The Hartford Income Shares Fund, Inc. STEPHEN T. JOYCE Vice Since 2000 Mr. Joyce currently serves as N/A N/A (age 45) President Senior Vice President and c/o Hartford Mutual Funds Director of the Institutional P.O. Box 2999 Products Group for Hartford Life Hartford, CT 06104-2999 Insurance Company. Mr. Joyce is also a Senior Vice President of HL Advisors and a Vice President of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. Previously, he served as Vice President (1997-1999) and Assistant Vice President (1994-1997) of Hartford Life Insurance Company.
21 OFFICERS AND INTERESTED DIRECTORS
NUMBER OF PORTFOLIOS TERM OF IN FUND POSITION OFFICE* AND COMPLEX OTHER HELD WITH LENGTH OF PRINCIPAL OCCUPATION(S) DURING OVERSEEN BY DIRECTORSHIPS NAME, AGE AND ADDRESS THE COMPANY TIME SERVED PAST 5 YEARS DIRECTOR HELD BY DIRECTOR -------------------------------------------------------------------------------------------------------------------------------- DAVID N. LEVENSON Vice Since 2000 Mr. Levenson serves as Senior N/A N/A (age 37) President Vice President of Hartford Life c/o Hartford Mutual Funds Insurance Company's Retail P.O. Box 2999 Product Management Group and is Hartford, CT 06104-2999 responsible for all retail product management and profitability. Mr. Levenson is also a Senior Vice President of HIFSCO. In addition, he serves as Vice President of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. Mr. Levenson joined The Hartford in 1995. JOHN C. WALTERS Vice Since 2000 Mr. Walters serves as Executive N/A N/A (age 45) President Vice President and Director of c/o Hartford Mutual Funds the Investment Products Division P.O. Box 2999 of Hartford Life Insurance Hartford, CT 06104-2999 Company. Mr. Walters is also a Managing Member and Executive Vice President of HIFSCO and HL Advisors. In addition, he is a Vice President of The Hartford Mutual Funds II, Inc., The Hartford Income Shares Fund, Inc., Hartford Series Fund, Inc. and Hartford HLS Series Fund II, Inc. Previously, Mr. Walters was with First Union Securities.
*Term of Office: Each officer and director may serve until his or her successor is elected and qualifies. **"Interested person", as defined in the 1940 Act, of the Company because of the person's affiliation with, or equity ownership of, HIFSCO or affiliated companies. STANDING COMMITTEES. The board of directors has established an Audit Committee, a Nominating Committee and a Litigation Committee for the Company. The Audit Committee and the Nominating Committee are each made up of those directors who are not "interested persons" of the Company. The Litigation Committee is made up of the following members of the board of directors of the Company: Robert M. Gavin, Lynn S. Birdsong and Duane E. Hill. The Audit Committee (i) oversees the Fund's accounting and financial reporting policies and practices, its internal controls and, as appropriate, the internal controls of certain service providers, (ii) oversees the quality and objectivity of the Fund's financial statements and the independent audit thereof, and (iii) acts as a liaison between the Fund's independent auditors and the full board of directors. The Nominating Committee screens and selects candidates to the board of directors. Any recommendations for nominees should be directed to the Secretary of the Company, who will then forward them to the Nominating Committee. The Nominating Committee will 22 consider nominees recommended by shareholders if the Committee is considering other nominees at the time of the recommendation and if the nominee meets the Committee's criteria. The Litigation Committee manages any legal actions that are brought by, on behalf of or against the Fund, the board of directors of the Company and/or the members thereof that are not "interested persons" of the Fund as defined in the 1940 Act. The Audit Committee and Nominating Committee met four times and three times, respectively, during the fiscal year ended October 31, 2004. All directors and officers of the Company, except for David Znamierowski, are also directors and officers of four other registered investment companies in the fund complex, which is comprised of those investment companies for which HIFSCO or HL Investment Advisors, LLC serves as investment adviser. In addition to being a director and officer of the Company, Mr. Znamierowski is also a director of one other registered investment company in the fund complex and an officer of four other registered investment companies in the fund complex. The following table discloses the dollar range of equity securities beneficially owned by each director as of December 31, 2003 (i) in the Fund and (ii) on an aggregate basis in any registered investment companies overseen by the director within the same family of investment companies. NON-INTERESTED DIRECTORS
AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN ALL REGISTERED INVESTMENT COMPANIES OVERSEEN DOLLAR RANGE OF EQUITY SECURITIES BY DIRECTOR IN FAMILY OF NAME OF DIRECTOR IN THE FUND INVESTMENT COMPANIES Lynn S. Birdsong None None Winifred Ellen Coleman None Over $100,000 Dr. Robert M. Gavin None Over $100,000 Duane E. Hill None None Phillip O. Peterson None $10,001-$50,000 Millard Handley Pryor, Jr. None $50,001-$100,000
INTERESTED DIRECTORS
AGGREGATE DOLLAR RANGE OF EQUITY SECURITIES IN ALL REGISTERED INVESTMENT COMPANIES OVERSEEN DOLLAR RANGE OF EQUITY SECURITIES BY DIRECTOR IN FAMILY OF NAME OF DIRECTOR IN THE FUND INVESTMENT COMPANIES Thomas M. Marra None Over $100,000 Lowndes Andrew Smith None Over $100,000 David Mark Znamierowski None $10,001-$50,000
23 COMPENSATION OF OFFICERS AND DIRECTORS The Company does not pay salaries or compensation to any of its officers or directors who are employed by The Hartford. The chart below sets forth the compensation paid by the Company to the following directors for the fiscal year ended October 31, 2004 and certain other information.
Pension Or Total Compensation Aggregate Retirement Benefits Estimated Annual From the Company And Compensation Accrued As Part Of Benefits Upon Fund Complex Paid To Name of Person, Position From the Company Fund Expenses Retirement Directors* --------------------------- ---------------- ------------------- ---------------- -------------------- Lynn S. Birdsong, Director $_____ $0 $0 $_____ Winifred E. Coleman, $_____ $0 $0 $_____ Director Dr. Robert M. Gavin, $_____ $0 $0 $_____ Director Duane E. Hill, Director $_____ $0 $0 $_____ Phillip O. Peterson, $_____ $0 $0 $_____ Director Millard H. Pryor, Jr., $_____ $0 $0 $_____ Director Lowndes A. Smith, Director $_____ $0 $0 $_____ John K. Springer, Director $_____ $0 $0 $_____
*As of October 31, 2004, five registered investment companies in the Complex paid compensation to the directors. The sales load for Class A shares of the Fund is waived for present and former officers, directors and employees of the Company, The Hartford, the transfer agent and their affiliates. Such waiver is designed to provide an incentive for individuals that are involved and affiliated with the Fund and their operations to invest in the Fund. The Company's Articles of Incorporation provide that the Company to the full extent permitted by Maryland law and the federal securities laws shall indemnify the directors and officers of the Company. The Articles of Incorporation do not authorize the Company to indemnify any director or officer against any liability to which he or she would otherwise be subject by reason of or for willful misfeasance, bad faith, gross negligence or reckless disregard of such person's duties. As of _____, 2004, the officers and directors of the Company did not beneficially own any class of any shares of the Fund to which this SAI relates. As of that date, no person held any interest in the Fund equal to 5% or more of outstanding shares of any class. Control is defined by the 1940 Act as the beneficial ownership, either directly or through one or more controlled companies, of more than 25 percent of the voting securities of a fund. A control person may be able to take actions regarding a fund it controls without the consent or approval of other shareholders. As of [_____], 2004, there were no control persons of the Fund. 24 INVESTMENT MANAGEMENT ARRANGEMENTS The Company, on behalf of the Fund, has entered into an investment management agreement with HIFSCO. The investment management agreements provide that HIFSCO, subject to the supervision and approval of the Company's board of directors, is responsible for the management of the Fund. In addition, HIFSCO provides administrative services to the Company, including, personnel, services, equipment and facilities and office space for proper operation of the Companies. Although HIFSCO, or its affiliates, have agreed to arrange for the provision of additional services necessary for the proper operation of the Company, the Fund pays for these services directly. HIFSCO has entered into sub-advisory agreements with the subadvisers of the Fund. Under the sub-advisory agreements, subject to the general supervision of the board of directors and HIFSCO, a subadviser is responsible for (among other things) the day-to-day investment and reinvestment of the assets of the Fund and furnishing the Fund with advice and recommendations with respect to investments and the purchase and sale of appropriate securities for the Fund. The Company relies on an exemptive order from the Securities and Exchange Commission that permits HIFSCO to appoint new subadvisers, with approval by the board of directors and without obtaining approval from those shareholders that participate in the Fund. Within 90 days after hiring any new subadviser, affected shareholders will receive all information about the new sub-advisory relationship that would have been included if a proxy statement had been required, except as permitted to be modified. HIFSCO will not enter into a sub-advisory agreement with an affiliated subadviser unless shareholders approve such agreement. The specific conditions of the exemptive order are as follows: 1. Before the Company may rely on the exemptive order, the operation of the Company under a Manager of Managers structure must be approved by a majority of the outstanding voting securities. This approval was received in a shareholder meeting held August 12, 1999. 2. The Company must disclose in its prospectus the existence, substance and effect of the exemptive order. In addition, the Company must hold itself out to the public as employing the Manager of Managers structure. The prospectus will prominently disclose that HIFSCO has ultimate responsibility (subject to oversight by the board of directors) to oversee the subadvisers and recommend their hiring, termination and replacement. 3. Within ninety (90) days of the hiring of any new subadviser, the shareholders participating in the Fund will be furnished all information about the new subadviser that would be included in a proxy statement, except as modified by the order to permit aggregate fee disclosure. This information will include aggregate fee disclosure and any change in such disclosure caused by the addition of a new subadviser. HIFSCO will meet this condition by providing shareholders with an information statement meeting the requirements of Regulation 14C, Schedule 14C, and Item 22 of Schedule 14A under the Securities Exchange Act of 1934, as amended (the "1934 Act"), except as modified by the order to permit aggregate fee disclosure. 4. HIFSCO will not enter into a sub-advisory agreement with any affiliated subadviser without that sub-advisory agreement, including the compensation to be paid thereunder, being approved by shareholders. 5. At all times, a majority of the board of directors of the Company will be directors who are not "interested persons," as that term is defined in Section 2(a)(19) of the 1940 Act, of the Company ("Independent Directors"), and the nomination of new or additional Independent Directors will be at the discretion of the then-existing Independent Directors. 6. When a subadviser change is proposed for the Fund with an affiliated subadviser, the board of directors, including a majority of the Independent Directors, will make a separate finding, reflected in the board of directors' minutes, that the change is in the best interests of the Fund and the shareholders participating in the Fund and does not involve a conflict of interest from which HIFSCO or the affiliated subadviser derives an inappropriate advantage. 25 7. HIFSCO will provide general management services to the Company and the Fund, including overall supervisory responsibility for the general management and investment of the Fund's securities portfolio, and, subject to review and approval by the board of directors, will: (a) set the Fund's overall investment strategies; (b) evaluate, select and recommend subadvisers to manage all or a part of the Fund's assets; (c) allocate and, when appropriate, reallocate the Fund's assets among multiple subadvisers; (d) monitor and evaluate the investment performance of subadvisers; and (e) implement procedures reasonably designed to ensure that the subadvisers comply with the Fund's investment objective, policies and restrictions. 8. No director or officer of the Company or directors or officers of HIFSCO will own directly or indirectly (other than through a pooled investment vehicle that is not controlled by such person) any interest in any subadviser except for (i) ownership of interests in HIFSCO or any entity that controls, is controlled by or is under common control with HIFSCO; or (ii) ownership of less than 1% of the outstanding securities of any class of equity or debt of a publicly-traded company that is either a subadviser or any entity that controls, is controlled by or is under common control with a subadviser. 9. The Company will include in its registration statement the aggregate fee disclosure. 10. Independent counsel knowledgeable about the 1940 Act and the duties of Independent Directors will be engaged to represent the Independent Directors of the Fund. The selection of such counsel will be within the discretion of the then-existing Independent Directors. 11. HIFSCO will provide the board of directors, no less often than quarterly, with information about HIFSCO's profitability. Such information will reflect the impact on profitability of the hiring or termination of any subadviser during the applicable quarter. 12. When a subadviser is hired or terminated, HIFSCO will provide the board of directors with information showing the expected impact on HIFSCO's profitability. As provided by the investment management agreement, the Fund pays HIFSCO an investment management fee, which is accrued daily and paid monthly, equal on an annual basis to a stated percentage of the Fund's average daily net assets. The investment management fee rate is as follows:
Average Daily Net Assets Annual Rate ------------------------ ----------- First $500 million 0.90% Next $500 million 0.85% Amount over $1 billion 0.80%
HIFSCO, not the Fund, pays the sub-advisory fees to the sub-advisers. Monthly, each sub-adviser is paid a pro rata portion of an annual fee based on the average daily net assets of the Fund. There is no advisory fee or sub-advisory fee. Because the Fund did not commence operations until January __, 2005, there is no advisory fee information available for the Fund. HIFSCO has voluntarily agreed to limit the expenses of each class of the Fund by reimbursing the Fund when total fund operating expenses of the class exceed the following percentages (this policy may be discontinued at any time):
HARTFORD SELECT GROWTH MIDCAP FUND CLASS A CLASS B CLASS C CLASS Y ---------------------------------- ------- ------- ------- ------- --% --% --% --%
Pursuant to the investment management agreement and investment sub-advisory agreements, neither HIFSCO nor the sub-advisers are liable to the Fund or its shareholders for an error of judgment or mistake of law or 26 for a loss suffered by the Fund in connection with the matters to which their respective agreements relate, except a loss resulting from willful misfeasance, bad faith or gross negligence on the part of HIFSCO or a sub-adviser in the performance of their duties or from their reckless disregard of the obligations and duties under the applicable agreement. The sub-advisers have agreed to indemnify HIFSCO to the fullest extent permitted by law against any and all loss, damage, judgment, fines, amounts paid in settlement and attorneys' fees incurred by HIFSCO to the extent resulting in whole or in part from any of the sub-advisers' acts or omissions related to the performance of their duties as set forth specifically in their respective sub-advisory agreements or otherwise from the sub-advisers' willful misfeasance, bad faith or gross negligence. HIFSCO, whose business address is 200 Hopmeadow Street, Simsbury, Connecticut 06089, was organized in 1995. As of ___________, 2004, HIFSCO had approximately $___ billion of assets under management. At a meeting of the board of directors of the Company on July 28, 2004, the board of directors unanimously voted to approve the investment management agreement and investment sub-advisory agreements. In this regard, the board of directors considered the following material factors relating to the agreements. The board of directors reviewed the quality of the services to be provided to the Fund by HIFSCO and each of the sub-advisers. The board of directors also reviewed the investment management fees to be paid to HIFSCO and by HIFSCO to the sub-advisers. In this connection, the board of directors reviewed comparative information prepared by a third party consultant on investment management fees paid and expenses incurred by similarly situated funds. The board of directors reviewed materials indicating that the management fees to be paid to HIFSCO were lower than the average advisory fees incurred by similarly situated funds, and equal to the median advisory fees incurred by similarly situated funds. The board of directors also reviewed materials comparing the aggregate expenses for the Fund to those of similarly situated funds. The board of directors also considered the high quality of the services to be performed for the Fund by HIFSCO and the sub-advisers, which includes its extensive research capabilities and fundamental analysis to be performed. The board of directors also considered the strong long term experience of HIFSCO and the sub-advisers, the compliance structure and systems established by HIFSCO and the sub-advisers, the financial viability of HIFSCO and the sub-advisers and HIFSCO's or the sub-advisers' control over the investment expenses such as transaction costs. The board of directors considered other benefits to HIFSCO or its affiliates from the investment management agreement with the Fund. Specifically, the board of directors reviewed information noting that Hartford Life, Inc. may receive a set fee for fund accounting and related services. The board of directors also reviewed the fact that HASCO, the Fund's transfer agent, will receive transfer agency compensation from the Fund. Finally, the board of directors reviewed information regarding the cost to provide advisory services to the Fund. Based upon its review, the board of directors concluded that it is in the best interests of the Fund and its shareholders for the board of directors to approve the investment management agreement and investment sub-advisory agreement for the Fund. In arriving at their decision to approve each of the agreements, the board of directors of the Company did not assign relative weights to the factors discussed above or deem any one or group of them to be controlling in and of themselves. The investment management agreement and investment sub-advisory agreements continue in effect for two years from initial approval and from year to year thereafter if approved annually by a vote of a majority of the directors of the Company, including a majority of the directors who are not parties to the agreements or interested persons of any party to the agreements, cast in person at a meeting called for the purpose of voting on such approval, or by holders of a majority of the Fund's outstanding voting securities. The agreements automatically terminate upon assignment as defined under the 1940 Act. The investment management agreement may be terminated without penalty on 60 days' notice at the option of either party to the agreement or by vote of the holders of a majority of the outstanding voting securities of the Fund. The investment sub-advisory agreements may be terminated at any time without the payment of any penalty by the board of directors of the Company or by vote of a majority of the outstanding voting securities of the Fund, by HIFSCO upon written notice to the applicable sub-adviser, and by the applicable sub-adviser upon 90 days' written notice to HIFSCO. The investment sub-advisory agreements also terminate automatically upon the termination of the corresponding investment management agreement. 27 Hartford Life, an affiliate of HIFSCO, provides fund accounting services to the Fund pursuant to a fund accounting agreement by and between the Company, on behalf of the Fund, and Hartford Life. These services include, but are not limited to, daily pricing of portfolio securities; computation of the net asset value and the net income of the Fund in accordance with the Fund's prospectuses and statement of additional information; calculation of dividend and capital gain distributions, if any; calculation of yields on the Fund and all classes thereof; preparation of various reports; and such other similar services with respect to the Fund as may be reasonably requested by the Fund. In consideration of services rendered and expenses assumed pursuant to this agreement, the Fund pays Hartford Life a fee calculated at the annual rate of 0.02% of its aggregate net assets. Because the Fund did not commence operations until January ___, 2005, there is no information with respect to compensation paid to Hartford Life. The Fund, HIFSCO and the sub-advisors have each adopted a code of ethics designed to protect the interests of the Fund's shareholders. Under each code of ethics, investment personnel are permitted to trade securities for their own account, including securities that may be purchased or held by the Fund, subject to a number of restrictions. Each code of ethics has been filed with the SEC and may be viewed by the public. PORTFOLIO TRANSACTIONS AND BROKERAGE The Company has no obligation to deal with any dealer or group of dealers in the execution of transactions in portfolio securities. Subject to any policy established by the Company's board of directors, the board of directors of the Fund and HIFSCO, the sub-advisers to the Fund are primarily responsible for the investment decisions of the Fund and the placing of its portfolio transactions. In placing orders, it is the policy of the Fund to obtain the most favorable net results, taking into account various factors, including price, dealer spread or commission, if any, size of the transaction and difficulty of execution. While the sub-advisers to the Fund generally seek reasonably competitive spreads or commissions, the Fund does not necessarily pay the lowest possible spread or commission. Upon instructions from HIFSCO, the sub-advisers to the Fund may also direct certain brokerage transactions to brokers/dealers that pay for certain services used by the Fund. The sub-advisers to the Fund generally deal directly with the dealers who make a market in the securities involved (unless better prices and execution are available elsewhere) if the securities are traded primarily in the over-the-counter market. Such dealers usually act as principals for their own account. On occasion, securities may be purchased directly from the issuer. In addition, the sub-advisers to the Fund may effect certain "riskless principal" transactions through certain dealers in the over-the-counter market under which "commissions" are paid on such transactions. Bonds and money market securities are generally traded on a net basis and do not normally involve either brokerage commissions or transfer taxes. While the sub-advisers to the Fund seek to obtain the most favorable net results in effecting transactions in the Fund's portfolio securities, broker-dealers who provide investment research to the sub-advisers may receive orders for transactions from the sub-advisers. Such research services ordinarily consist of assessments and analyses of the business or prospects of a company, industry, or economic sector. If, in the judgment of the sub-advisers to the Fund, the Fund will be benefited by such research services, the sub-advisers are authorized to pay spreads or commissions to brokers or dealers furnishing such services which are in excess of spreads or commissions which another broker or dealer may charge for the same transaction. Information so received is in addition to and not in lieu of the services required that the sub-advisers to the Fund must perform under their respective investment subadvisory agreements. The expenses of the sub-advisers to the Fund are not necessarily reduced as a result of the receipt of such information. The sub-advisers to the Fund may use such research in providing investment advice to portfolios other than those for which the transactions are made. Similarly, the Fund may benefit from such research obtained by the sub-advisers to the Fund for portfolio transactions for other clients. Investment decisions for the Fund are made independently from those of any other clients that are managed by the sub-advisers to the Fund or their affiliates. If, however, accounts managed by the sub-advisers to the Fund are simultaneously engaged in the purchase of the same security, then, as authorized by the Fund's board of directors, available securities may be allocated to the Fund or other client account and may be averaged as to price in a manner determined by the sub-advisers to be fair and equitable. Such allocation and pricing may affect the 28 amount of brokerage commissions paid by the Fund. In some cases, this system might adversely affect the price paid by the Fund (for example, during periods of rapidly rising or falling interest rates) or limit the size of the position obtainable for the Fund (for example, in the case of a small issue). Likewise, if accounts managed by the sub-advisers to the Fund are simultaneously engaged in the sale of the same security, the same process may be followed with similar consequences. Accounts managed by the sub-advisers to the Fund (or its affiliates) may hold securities held by the Fund . Because of different investment objectives or other factors, a particular security may be purchased by the sub-advisers to the Fund for one client when one or more other clients are selling the same security. Because the Fund did not commence operations until January ___, 2005, there is no brokerage commission information available for the Fund. FUND EXPENSES EXPENSES OF THE FUND The Fund pays its own expenses including, without limitation: (1) expenses of maintaining the Fund and continuing its existence, (2) registration of the Fund under the 1940 Act, (3) auditing, accounting and legal expenses, (4) taxes and interest, (5) governmental fees, (6) expenses of issue, sale, repurchase and redemption of Fund shares, (7) expenses of registering and qualifying the Fund and its shares under federal and state securities laws and of preparing and printing prospectuses for such purposes and for distributing the same to shareholders and investors, and fees and expenses of registering and maintaining registrations of the Fund and of the Fund's principal underwriter, if any, as broker-dealer or agent under state securities laws, (8) expenses of reports and notices to shareholders and of meetings of shareholders and proxy solicitations therefor, (9) expenses of reports to governmental officers and commissions, (10) insurance expenses, (11) association membership dues, (12) fees, expenses and disbursements of custodians for all services to the Fund, (13) fees, expenses and disbursements of transfer agents, dividend disbursing agents, shareholder servicing agents and registrars for all services to the Fund, (14) expenses for servicing shareholder accounts, (15) any direct charges to shareholders approved by the directors of the Fund, (16) compensation and expenses of directors of the Fund who are not "interested persons" of the Fund, and (17) such nonrecurring items as may arise, including expenses incurred in connection with litigation, proceedings and claims and the obligation of the Fund to indemnify its directors and officers with respect thereto. DISTRIBUTION ARRANGEMENTS GENERAL Hartford Investment Financial Services, LLC ("HIFSCO") serves as the principal underwriter for the Fund pursuant to an Underwriting Agreement initially approved by the board of directors of the Company. HIFSCO is a registered broker-dealer and member of the NASD. Shares of the Fund are continuously offered and sold by selected broker-dealers who have selling agreements with HIFSCO. Except as discussed below under Distribution Plans, HIFSCO bears all the expenses of providing services pursuant to the Underwriting Agreement including the payment of the expenses relating to the distribution of prospectuses for sales purposes as well as any advertising or sales literature. The Underwriting Agreement continues in effect for two years from initial approval and for successive one-year periods thereafter, provided that each such continuance is specifically approved (1) by the vote of a majority of the directors of the Company, including a majority of the directors who are not parties to the Underwriting Agreement or interested persons (as defined in the 1940 Act) of any such party, or (2) by the vote of a majority of the outstanding voting securities of the Fund. HIFSCO is not obligated to sell any specific amount of shares of the Fund. HIFSCO is authorized by the Company to receive purchase and redemption orders on behalf of the Fund. HIFSCO is authorized to designate other intermediaries to receive purchase or redemption orders on the Fund's behalf. In these circumstances the Fund is deemed to have received a redemption or purchase order when an authorized broker or, if applicable, a broker's authorized designee receives the order. Such orders are priced at the Fund's net asset value next computed, including any applicable sales charges, after they are received by the authorized brokers or the broker's authorized designee and accepted by the Company. 29 In addition to the commissions (reallowed and/or advanced) and Rule 12b-1 fees described in this SAI and in the Fund's prospectuses, HIFSCO and its affiliates pay, out of their own assets, significant additional compensation to broker-dealers, financial institutions and other persons ("Financial Intermediaries") in connection with the sale and distribution of the Fund's shares ("Additional Payments"). Certain Additional Payments are generally based on average net assets (or on aged assets) of the Fund attributable to a particular Financial Intermediary, on sales of the Fund's shares attributable to a particular Financial Intermediary, and/or on reimbursement of ticket charges. Such Additional Payments are generally made for the placement of the Fund on a Financial Intermediary's list of mutual funds available for purchase by its customers and/or for including the Fund within a group of mutual funds that receive special marketing focus. Separate Additional Payments may take the form of, among others: (1) "due diligence" payments for a Financial Intermediary's examination of the Fund and payments for providing extra employee training and information relating to the Fund and (2) "marketing support" fees for providing assistance in promoting the sale of the Fund's shares ("Negotiated Additional Amounts"). Subject to NASD regulations, HIFSCO and its affiliates may contribute Negotiated Additional Amounts to various non-cash and cash incentive arrangements to promote the sale of shares, as well as sponsor various educational programs, sales contests and/or promotions in which participants may receive prizes such as travel awards, merchandise and cash and/or investment research pertaining to particular securities and other financial instruments or to the securities and financial markets generally, educational information and related support materials and hardware and/or software. HIFSCO and its affiliates may also pay for the travel expenses, meals, lodging and entertainment of Financial Intermediaries and their salespersons and guests in connection with education, sales and promotional programs, subject to applicable NASD regulations. These programs, which may be different for different Financial Intermediaries, will not change the price an investor will pay for shares or the amount that the Fund will receive from such sale. As of March 1, 2004, HIFSCO has entered into arrangements to make Additional Payments that are generally based on average net assets (or on aged assets) of the Fund attributable to a particular Financial Intermediary, on sales of the Fund's shares attributable to a particular Financial Intermediary, and/or on reimbursement of ticket charges to A. G. Edwards & Sons, Inc., Advest, Inc., Banc of America Investment Services, Inc., Centaurus Financial, Inc., Charles Schwab & Co., Inc., Citicorp Investment Services, Citigroup Global Markets, Inc., Colonial Brokerage, Inc., Commerce Capital Markets, Inc., Commonwealth Financial Network, CUSO Financial Services, L.P., Edward D. Jones & Co., L.P., Ferris, Baker Watts Incorporated, FFP Securities, Inc., Fidelity Investments, Fifth Third Securities, Inc., Frost Brokerage Services, Inc., Harbour Investments, Inc., Investment Professionals, Inc., J.J.B. Hilliard, W.L. Lyons, Inc., Janney Montgomery Scott LLC, Jefferson Pilot Securities Corporation, Linsco/Private Ledger Corp., Main Street Management Company, Merrill Lynch Pierce Fenner & Smith, Morgan Keegan & Company, Inc., Mutual Service Corporation, NCF Financial Services, Inc., NEXT Financial Group, Inc., NFP Securities, Inc., Piper Jaffray & Co., Southtrust Securities, Inc., Stifel, Nicolaus & Company, Incorporated, Securities America, Inc., Synovus Securities, Inc., The Huntington Investment Company, Triad Advisors, Inc., UBS Financial Services Inc., Wachovia Securities, LLC, WM Financial Services, Inc., and Woodbury Financial Services, Inc. Woodbury Financial Services, Inc. is an indirect wholly-owned subsidiary of The Hartford. HIFSCO may enter into arrangements with other Financial Intermediaries to make such Additional Payments. Separate Additional Payments in the form of Negotiated Additional Amounts may also be made to the above-listed Financial Intermediaries and to other Financial Intermediaries. The Additional Payments to Financial Intermediaries in connection with the sale and distribution of the Fund's shares are negotiated based on a range of factors, including, but not limited to, reputation in the industry, ability to attract and retain assets (including distribution of particular classes of the Fund's shares), target markets, customer relationships and quality of service. No one factor is determinative of the type or amount of Additional Payments to be provided and factors are weighed in the assessment of such determination. HIFSCO may provide additional compensation to Edward D. Jones & Co., LP ("Edward Jones") based on sales of certain shares of the Fund attributable to Edward Jones, on assets invested in the Fund attributable to Edward Jones, and generally on a percentage share of the net income of HIFSCO (based on the total amount of assets attributable to Edward Jones). In the event that the arrangement with Edward Jones is terminated, HIFSCO may be required to pay Edward Jones additional profit-sharing based compensation. In addition, HIFSCO may pay Negotiated Additional Amounts to Edwards Jones in such forms as, among others, "due diligence" payments and "marketing support" fees. Because the Fund did not commence operations until January __, 2005, there is no information regarding Additional Payments, including Negotiated Additional Amounts, paid by HIFSCO or its affiliates to Edward Jones. 30 Because the Fund did not commence operations until January __, 2005, there is no information regarding total Additional Payments, including Negotiated Additional Amounts, paid by HIFSCO or its affiliates to Financial Intermediaries. Aside from Additional Payments made in connection with the sale and distribution of the Fund's shares, HIFSCO and its affiliates, out of their own assets, may pay compensation to Financial Intermediaries for subaccounting, administrative and/or shareholder processing services. COMMISSIONS TO DEALERS Because the Fund did not commence operations until January __, 2005, there is no information regarding the aggregate dollar amount of commissions received by HIFSCO for the sale of Fund shares. Generally, commissions on sales of Class A shares are reallowed to broker-dealers as follows:
FRONT-END SALES FRONT-END SALES CHARGE AS A CHARGE AS A COMMISSION AS PERCENTAGE OF PERCENTAGE OF AMOUNT PERCENTAGE OF AMOUNT OF PURCHASE OFFERING PRICE INVESTED OFFERING PRICE Less than $50,000 5.50% 5.82% 4.75% $50,000 or more but less than $100,000 4.50% 4.71% 4.00% $100,000 or more but less than $250,000 3.50% 3.63% 3.00% $250,000 or more but less than $500,000 2.50% 2.56% 2.00% $500,000 or more but less than $1 million 2.00% 2.04% 1.75% $1 million or more(1) 0% 0% 0%
(1) Investments of $1 million or more in Class A shares may be made with no front-end sales charge. However, there is a contingent deferred sales charge (CDSC) of 1% on any shares sold within 18 months of purchase. For purposes of this CDSC, all purchases made during a calendar month are counted as having been made on the first day of that month. The CDSC is based on the lesser of the original purchase cost or the current market value of the shares being sold and is not charged on shares you acquired by reinvesting your dividends and distributions. To keep your CDSC as low as possible, each time you place a request to sell shares we will first sell any shares in your account that are not subject to a CDSC. HIFSCO may pay up to the entire amount of the sales commission to particular broker-dealers. HIFSCO also may pay dealers of record commissions on purchases over $1 million in an amount up to the sum of 1.0% of the first $4 million, plus 0.50% of the next $6 million, plus 0.25% of share purchases over $10 million. In addition, HIFSCO may provide compensation to dealers of record for certain shares purchased without a sales charge. HIFSCO pays commissions to dealers of up to 4% of the purchase price of Class B shares purchased through dealers and pays commissions to dealers of up to 1% of the purchase price of Class C shares purchased through dealers. HIFSCO's principal business address is 200 Hopmeadow Street, Simsbury, Connecticut 06089. HIFSCO was organized as a Delaware corporation on December 9, 1996 and is an indirect wholly-owned subsidiary of The Hartford. 31 DISTRIBUTION PLANS The Company, on behalf of the Fund, has adopted separate distribution plans (the "Plans") for Class A, Class B and Class C shares of the Fund pursuant to appropriate resolutions of the Company's board of directors in accordance with the requirements of Rule 12b-1 under the 1940 Act and the requirements of the applicable rule of the NASD regarding asset-based sales charges. CLASS A PLAN Pursuant to the Class A Plan, the Fund may compensate HIFSCO for its expenditures in financing any activity primarily intended to result in the sale of Fund shares and for maintenance and personal service provided to existing Class A shareholders. The expenses of the Fund pursuant to the Class A Plan are accrued on a fiscal year basis and may not exceed, with respect to the Class A shares of the Fund, the annual rate of 0.35% of the Fund's average daily net assets attributable to Class A shares. However, the Company's board of directors has currently authorized Rule 12b-1 payments of only up to 0.25% of the Fund's average daily net assets attributable to Class A shares. The entire amount of the fee may be used for shareholder servicing expenses with the remainder, if any, used for distribution expenses. CLASS B PLAN Pursuant to the Class B Plan, the Fund may pay HIFSCO a fee of up to 1.00% of the average daily net assets attributable to Class B shares, 0.75% of which is a fee for distribution financing activities and 0.25% of which is for shareholder account services. HIFSCO will advance to dealers the first-year service fee at a rate equal to 0.25% of the amount invested. As compensation for such advance, HIFSCO may retain the service fee paid by the Fund with respect to such shares for the first year after purchase. Dealers will become eligible for additional service fees with respect to such shares commencing in the thirteenth month following purchase. Brokers may from time to time be required to meet certain other criteria in order to receive service fees. HIFSCO or its affiliates are entitled to retain all service fees payable under the Class B Plan for which there is no dealer of record or for which qualification standards have not been met as partial consideration for personal services and/or account maintenance services performed by HIFSCO or its affiliates for shareholder accounts. The Class B Plan also provides that HIFSCO will receive all contingent deferred sales charges attributable to Class B shares. CLASS C PLAN Pursuant to the Class C Plan, the Fund may pay HIFSCO a fee of up to 1.00% of the average daily net assets attributable to Class C shares, 0.75% of which is a fee for distribution financing activities and 0.25% of which is for shareholder account services. HIFSCO will advance to dealers the first-year service fee at a rate equal to 0.25% of the amount invested. As compensation for such advance, HIFSCO may retain the service fee paid by the Fund with respect to such shares for the first year after purchase. Dealers will become eligible for additional service fees with respect to such shares commencing in the thirteenth month following purchase. Brokers may from time to time be required to meet certain other criteria in order to receive service fees. HIFSCO or its affiliates are entitled to retain all service fees payable under the Class C Plan for which there is no dealer of record or for which qualification standards have not been met as partial consideration for personal services and/or account maintenance services performed by HIFSCO or its affiliates for shareholder accounts. The Class C Plan also provides that HIFSCO will receive all contingent deferred sales charges attributable to Class C shares. GENERAL Distribution fees paid to HIFSCO may be spent on any activities or expenses primarily intended to result in the sale of the Company's shares including: (a) payment of initial and ongoing commissions and other compensation payments to brokers, dealers, financial institutions or others who sell the Fund's shares, (b) compensation to employees of HIFSCO, (c) compensation to and expenses, including overhead such as communications and telephone, training, supplies, photocopying and similar types of expenses, of HIFSCO incurred in the printing and mailing or other dissemination of all prospectuses and statements of additional information, (d) the costs of preparation, printing and mailing of reports used for sales literature and related expenses, i.e., advertisements and sales literature, and (e) other distribution-related expenses and for the provision of personal service and/or the maintenance of shareholder accounts. These plans are considered compensation type plans which means that the Fund pays HIFSCO the entire fee regardless of HIFSCO's expenditures. Even if HIFSCO's actual expenditures exceed the fee payable to HIFSCO at any given time, the Fund will not be obligated to pay more than that fee. In accordance with the terms of the Plans, HIFSCO provides to the Fund, for review by the Company's board of directors, a quarterly written report of the amounts expended under the respective Plans and the purpose for 32 which such expenditures were made. In the board of directors' quarterly review of the Plans, they review the level of compensation the Plans provide in considering the continued appropriateness of the Plans. The Plans were adopted by a majority vote of the board of directors of the Company, including at least a majority of directors who are not, and were not at the time they voted, interested persons of the Fund as defined in the 1940 Act and do not and did not have any direct or indirect financial interest in the operation of the Plans, cast in person at a meeting called for the purpose of voting on the Plans. In approving the Plans, the directors identified and considered a number of potential benefits which the Plans may provide including the potential to increase assets in order to benefit from economies of scale. The board of directors of the Company believes that there is a reasonable likelihood that the Plans will benefit the Fund and its current and future shareholders. Under their terms, the Plans remain in effect from year to year provided such continuance is approved annually by vote of the board of directors of the Company in the manner described above. The Plans may not be amended to increase materially the amount to be spent for distribution without approval of the shareholders of the Fund, and material amendments to the Plans must also be approved by the board of directors in the manner described above. A Plan may be terminated at any time, without payment of any penalty, by vote of the majority of the directors of the board of directors who are not interested persons of the Fund and have no direct or indirect financial interest in the operations of the Plan, or by a vote of a "majority of the outstanding voting securities" of the Fund. A Plan will automatically terminate in the event of its assignment. Because the Fund did not commence operations until January __, 2005, there is no information regarding 12b-1 fees paid by the Fund. PURCHASE AND REDEMPTION OF SHARES For information regarding the purchase of Fund shares, see "About Your Account -- Buying Shares" in the Fund's prospectuses. For a description of how a shareholder may have the Fund redeem his/her shares, or how he/she may sell shares, see "About Your Account -- Selling Shares" in the Fund's prospectuses. RIGHTS OF ACCUMULATION The Fund offers to all qualifying investors rights of accumulation under which investors are permitted to purchase Class A, Class L and Class E shares of any funds of The Hartford Mutual Funds, Inc. and The Hartford Mutual Funds II, Inc. at the price applicable to the total of (a) the dollar amount then being purchased plus (b) an amount equal to the then current net asset value of the purchaser's holdings of all shares of any funds of The Hartford Mutual Funds, Inc. and The Hartford Mutual Funds II, Inc. For purposes of the rights of accumulation program, the purchaser may include all shares owned by family members. The definition of family member varies depending upon when the purchaser opened the account. For accounts opened on or after August 16, 2004, a family member is the owner's spouse and any minor children living in the owner's household. For accounts opened before August 16, 2004 for Class A shares, a family member is an owner's spouse, parent, grandparent, child, grandchild, brother, sister, step-family members and in-laws. As of August 16, 2004, account values invested in fixed annuity, variable annuity and variable life insurance products will no longer be considered towards the accumulation privilege for Class A, Class L and Class E shares. Acceptance of the purchase order is subject to confirmation of qualification. The rights of accumulation may be amended or terminated at any time as to subsequent purchases. Hartford Administrative Services Company ("HASCO"), The Hartford Mutual Funds, Inc. and The Hartford Mutual Funds II, Inc.'s transfer agent, must be notified by you or your broker each time a qualifying purchase is made. LETTER OF INTENT Any person may qualify for a reduced sales charge on purchases of Class A shares made within a thirteen-month period pursuant to a Letter of Intent ("LOI"). Class A shares acquired through the reinvestment of distributions do not constitute purchases for purposes of the LOI. A Class A shareholder may include, as an accumulation credit towards the completion of such LOI, the value of all shares of any fund of the Company owned by the shareholder. Such value is determined based on the public offering price on the date of the LOI. During the term of an LOI, HASCO will hold shares in escrow to secure payment of the higher sales charge applicable for shares actually purchased if the indicated amount on the LOI is not purchased. Dividends and capital gains will be paid on all escrowed shares and these shares will be released when the amount indicated on the LOI has been purchased. An LOI does not obligate the investor to buy or the Fund to sell the indicated amount of the 33 LOI. If a Class A shareholder exceeds the specified amount of the LOI and reaches an amount which would qualify for a further quantity discount, a retroactive price adjustment will be made at the time of the expiration of the LOI. The resulting difference in offering price will purchase additional Class A shares for the shareholder's account at the applicable offering price. If the specified amount of the LOI is not purchased, the shareholder shall remit to HASCO an amount equal to the difference between the sales charge paid and the sales charge that would have been paid had the aggregate purchases been made at a single time. If the Class A shareholder does not within twenty days after a written request by HASCO pay such difference in sales charge, HASCO will redeem an appropriate number of escrowed shares in order to realize such difference. The LOI may be backdated up to 90 days. Additional information about the terms of the LOI are available from your registered representative or from HASCO at 1-888-843-7824. SYSTEMATIC WITHDRAWAL PLAN The Systematic Withdrawal Plan ("SWP") is designed to provide a convenient method of receiving fixed payments at regular intervals only from Class A shares not subject to a CDSC (except as noted below) of the Fund deposited by the applicant under this SWP. The applicant must deposit or purchase for deposit shares of the Fund having a total value of not less than $5,000. Periodic checks of $50 or more will be sent to the applicant, or any person designated by him, monthly or quarterly. Any income dividends or capital gains distributions on shares under the SWP will be credited to the SWP account on the payment date in full and fractional shares at the net asset value per share in effect on the record date. SWP payments are made from the proceeds of the redemption of shares deposited in a SWP account. Redemptions are potentially taxable transactions to shareholders. To the extent that such redemptions for periodic withdrawals exceed dividend income reinvested in the SWP account, such redemptions will reduce and may ultimately exhaust the number of shares deposited in the SWP account. In addition, the amounts received by a shareholder cannot be considered as an actual yield or income on his or her investment because part of such payments may be a return of his or her capital. The SWP may be terminated at any time (1) by written notice to the Fund or from the Fund to the shareholder, (2) upon receipt by the Fund of appropriate evidence of the shareholder's death, or (3) when all shares under the SWP have been redeemed. The fees of the Fund for maintaining SWPs are paid by the Fund. SPECIAL REDEMPTIONS Although it would not normally do so, the Fund has the right to pay the redemption price of shares of the Fund in whole or in part in portfolio securities as prescribed by the Company's directors. When the shareholder sells portfolio securities received in this fashion, he/she would incur a brokerage charge. Any such securities would be valued for the purposes of making such payment at the same value as used in determining net asset value. The Fund has elected to be governed by Rule 18f-1 under the 1940 Act, pursuant to which the Fund is obligated to redeem shares solely in cash up to the lesser of $250,000 or 1% of the net asset value of the Fund during any 90-day period for any one account. DEFERRED SALES CHARGE ON CLASS A, CLASS B AND CLASS C SHARES Investments in Class B shares are purchased at net asset value per share without the imposition of an initial sales charge so that the Fund will receive the full amount of the purchase payment. Class A shares which were purchased without a front-end sales charge and which are redeemed within eighteen months of purchase, Class B shares which are redeemed within six years of purchase, and Class C shares which are redeemed within one year of purchase, are subject to a CDSC at the rates set forth in the prospectus as a percentage of the dollar amount subject to the CDSC. The charge is assessed on an amount equal to the lesser of the current market value or the original purchase cost of the Class A, Class B or Class C shares being redeemed. No CDSC is imposed on increases in account value above the initial purchase prices, including all shares derived from reinvestment of dividends or capital gains distributions. The amount of the CDSC, if any, varies depending on the number of years from the time of payment for the purchase of Class B shares until the time of redemption of such shares. Solely for purposes of determining this number of years from the time of any payment for the purchases of Class B shares, all payments during a month will be aggregated and deemed to have been made on the first day of the month. 34 In determining whether a CDSC applies to a redemption, the calculation is determined in a manner that results in the lowest possible rate being charged. To determine whether a CDSC applies, the Fund redeems shares in the following order: (1) shares representing an increase over the original purchase cost, (2) shares acquired through reinvestment of dividends and capital gains distributions, (3) Class B shares held for over 6 years or Class C shares held over 1 year, and (4) Class B shares held the longest during the six-year period. When requesting a redemption for a specific dollar amount, please indicate if you require the proceeds to equal the dollar amount requested. If not indicated, only the specified dollar amount will be redeemed from your account and the proceeds will be less any applicable CDSC. Proceeds from the CDSC are paid to the distributor and are used in whole or in part by the Fund to defray its expenses related to providing distribution-related services to the Fund in connection with the sale of the Class A, Class B and Class C shares, such as the payment of compensation to select selling brokers for selling these classes of shares. The combination of the CDSC and the distribution and service fees facilitates the ability of the applicable Fund to sell the Class B shares without a sales charge being deducted, and to sell Class A shares with a 4.50% or 5.50% maximum sales charge, as applicable, and Class C shares with a 1% initial sales charge, at the time of the purchase. The CDSC will be waived on redemptions of Class B and Class C shares and of Class A shares that are subject to the CDSC in the following cases: - to make SWP payments that are limited annually to no more than 12% of the value of the account at the time the plan is initiated, - because of shareholder death or disability, - because of the death or disability of the grantor of a living trust, - under reorganization, liquidation, merger or acquisition transactions involving other investment companies, and - for retirement plans under the following circumstances: (1) to return excess contributions, (2) hardship withdrawals as defined in the plan, (3) under a Qualified Domestic Relations Order as defined in the Internal Revenue Code, (4) to meet minimum distribution requirements under the Internal Revenue Code, (5) to make "substantially equal payments" as described in Section 72(t) of the Internal Revenue Code, and (6) after separation from service. SUSPENSION OF REDEMPTIONS The Fund may not suspend a shareholder's right of redemption, or postpone payment for a redemption for more than seven days, unless the New York Stock Exchange (NYSE) is closed for other than customary weekends or holidays, or trading on the NYSE is restricted, or for any period during which an emergency exists as a result of which (1) disposal by the Fund of securities owned by it is not reasonably practicable, or (2) it is not reasonably practicable for the Fund to fairly determine the value of its assets, or for such other periods as the SEC may permit for the protection of investors. DETERMINATION OF NET ASSET VALUE The net asset value of the shares of all classes of the Fund is determined by Hartford Life in the manner described in the Fund's prospectuses. The Fund is closed for business and does not price its shares on the following business holidays: New Year's Day, Martin Luther King Day, Presidents' Day, Good Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, Christmas Day and other holidays observed by the NYSE. Securities held by the Fund will be valued as follows: debt securities (other than short-term obligations) are valued 35 on the basis of valuations furnished by an unaffiliated pricing service which determines valuations for normal institutional size trading units of debt securities. Securities for which prices are not available from an independent pricing service, but where an active market exists, are valued using market quotations obtained from one or more dealers that make markets in the securities or from a widely-used quotation system in accordance with procedures established by the Fund's board of directors. Debt investments held by the Fund with a maturity of 60 days or less are valued at amortized cost, which approximates market value. Short-term investments with a maturity of more than 60 days when purchased are valued based on market quotations until the remaining days to maturity become less than 61 days. From such time until maturity, the investments are valued at amortized cost. Equity securities are valued at the official closing price or at the last sales price reported on principal securities exchanges (domestic or foreign) on which they are traded. If no sale took place on a particular day and in the case of certain equity securities traded over-the-counter, then such securities are valued at the mean between the bid and asked prices. For securities traded on the NASDAQ national market system, the Fund utilizes the NASDAQ Official Closing Price which compares the last trade to the bid/ask range of a security. If the last trade falls within the bid-ask range, then that price will be the closing price. If the last trade is outside the bid/ask range, and falls above the ask, the ask will be the closing price. If the last price is below the bid, the bid will be the closing price. Securities quoted in foreign currencies are translated into U.S. dollars at the prevailing exchange rates. Options are valued at the last sales price; if no sale took place on a particular day, then options are valued at the mean between the bid and asked prices. Securities for which market quotations are not readily available and all other assets are valued in good faith at fair value by, or under guidelines established by, the Fund's boards of directors. Foreign securities markets may trade on days when the Fund does not compute its net asset value or may close at times that differ from the close of the NYSE. If an event that affects the value of a security occurs after the publication of market quotations used by the Fund to price its securities but before the close of regular trading on the NYSE, the Fund may use fair value estimates as determined under procedures established by the Fund's board of directors. Under the amortized cost method of valuation, an instrument is valued at cost and the interest payable at maturity upon the instrument is accrued as income, on a daily basis, over the remaining life of the instrument. Neither the amount of daily income nor the net asset value is affected by unrealized appreciation or depreciation of the portfolio's investments assuming the instrument's obligation is paid in full on maturity. The Fund's maximum offering price per Class A shares is determined by adding the maximum sales charge to the net asset value per share. The Fund's offering price per Class C share is determined by adding the initial sales charge to the net asset value per share. Class B and Class Y shares are offered at net asset value without the imposition of an initial sales charge. CAPITALIZATION AND VOTING RIGHTS The Company was incorporated in Maryland on March 21, 1996. The authorized capital stock of the Company consists of 13 billion shares of common stock, par value $0.001 per share ("Common Stock"). The shares of Common Stock are divided into thirty-six series: Advisers Fund (760,000,000 shares); Capital Appreciation Fund (620,000,000 shares); Capital Preservation Fund (660,000,000 shares); Disciplined Equity Fund (300,000,000 shares); Dividend and Growth Fund (500,000,000 shares); Equity Income Fund (300,000,000 shares); Focus Fund (300,000,000 shares); Focus Growth Fund (300,000,000 shares); Global Communications Fund (300,000,000 shares); Global Financial Services Fund (300,000,000 shares); Global Health Fund (300,000,000 shares); Global Leaders Fund (300,000,000 shares); Global Technology Fund (300,000,000 shares); High Yield Fund (300,000,000 shares); Income Fund (300,000,000 shares); Inflation Plus Fund (400,000,000 shares); International Capital Appreciation Fund (300,000,000 shares); International Opportunities Fund (300,000,000 shares); International Small Company Fund (300,000,000 shares); MidCap Fund (460,000,000 shares); MidCap Value Fund (300,000,000 shares); Money Market Fund (2,700,000,000 shares); Principal Protection Fund (300,000,000 shares); Select MidCap Growth Fund (300,000,000 shares); Short Duration Fund (300,000,000 shares); Small Company Fund (300,000,000 shares); Stock Fund (300,000,000 shares); Tax-Free California Fund (300,000,000 shares); Tax-Free New York Fund (300,000,000 shares); Total Return Bond Fund (300,000,000 shares); Value Fund (300,000,000 shares); Aggressive Growth Allocation Fund (300,000,000 shares); Growth Allocation Fund (300,000,000 shares); 36 Balanced Allocation Fund (300,000,000 shares); Conservative Allocation Fund (300,000,000 shares); and Income Allocation Fund (300,000,000 shares). The board of directors of the Company may reclassify authorized shares to increase or decrease the allocation of shares among the series described above or to add any new series to the Company. The Company's board of directors is also authorized, from time to time and without further shareholder approval, to authorize additional shares and to classify and reclassify existing and new series into one or more classes. Accordingly, the directors of the Company have authorized the issuance of four classes of shares of the Fund, designated as Class A, Class B, Class C and Class Y shares. Each issued and outstanding share is entitled to participate equally in dividends and distributions declared by the Fund and, upon liquidation or dissolution, in the net assets of the Fund remaining after satisfaction of outstanding liabilities. The shares of the Fund, and each class within the Fund, are, when issued, fully paid and non-assessable. Such shares have no preemptive or, for Class A, Class C and Class Y shares, conversion rights and are freely transferable. As an investment company incorporated in Maryland, the Company is not required to hold routine annual shareholder meetings. Meetings of shareholders will be called whenever one or more of the following is required to be acted upon by shareholders pursuant to the 1940 Act: (1) election of directors, (2) approval of an investment management agreement or sub-advisory agreement, or (3) ratification of the selection of the Fund's independent accountants. Shares of common stock have equal voting rights (regardless of the net asset value per share). Shares do not have cumulative voting rights. Accordingly, the holders of more than 50% of the shares of the Company voting for the election of directors can elect all of the directors if they choose to do so, and in such an event, the holders of the remaining shares would not be able to elect any directors. Although directors are not elected annually, shareholders have the right to remove one or more directors. When required by law, if the holders of 25% or more of the Company's outstanding shares request it in writing, a meeting of the Company's shareholders will be held to approve or disapprove the removal of director or directors. Matters in which the interests of all the series of the Company are substantially identical (such as the election of directors or the ratification of the selection of the independent accountants) are voted on by all shareholders of the Company without regard to the separate series. Matters that affect all or several series, but where the interests of the series are not substantially identical (such as approval of an investment management agreement) are voted on separately by the shareholders of each series. Matters that affect only one series (such as a change in its fundamental policies) are voted on separately for the series by the shareholders of that series. Likewise, matters that affect only one class of shares of a series (such as approval of a plan of distribution) are voted on separately for that class by the holders of shares of that class. TAXES FEDERAL TAX STATUS OF THE FUND The following discussion of the federal tax status of the Fund is a general and abbreviated summary based on tax laws and regulations in effect on the date of this SAI. Tax law is subject to change by legislative, administrative or judicial action. The Fund is treated as a separate taxpayer for federal income tax purposes. The Company intends for the Fund to elect to be treated as a regulated investment company under Subchapter M of Chapter 1 of the Internal Revenue Code of 1986, as amended (the "Code"), and to qualify as a regulated investment company each year. If the Fund: (1) continues to qualify as a regulated investment company, and (2) distributes to its shareholders at least 90% of its investment company taxable income (including for this purpose its net ordinary investment income and net realized short-term capital gains) and 90% of its tax-exempt interest income (reduced by certain expenses) (the "90% distribution requirement") (which the Company intends the Fund to do), then under the provisions of Subchapter M, the Fund should have little or no income taxable under the Code. In particular, the Fund generally is not subject to federal income tax on the portion of its investment company taxable income and net capital gain (i.e., 37 net long-term capital gain in excess of short-term capital loss) it distributes to shareholders (or treats as having been distributed to shareholders). The Fund must meet several requirements to maintain its status as a regulated investment company. These requirements include the following: (1) at least 90% of the Fund's gross income for each taxable year must be derived from dividends, interest, payments with respect to loaned securities, gains from the sale or disposition of securities (including gains from related investments in foreign currencies), and other income (including gains from options, futures or forward contracts) derived with respect to its business of investing in such securities or currencies; and (2) at the close of each quarter of the Fund's taxable year, (a) at least 50% of the value of the Fund's total assets must consist of cash, cash items, securities of other regulated investment companies, U.S. Government securities and other securities which, with respect to any one issuer, do not represent more than 5% of all of the Fund's assets nor more than 10% of the outstanding voting securities of such issuer, and (b) the Fund must not invest more than 25% of its total assets in the securities of any one issuer (other than U.S. Government securities or the securities of other regulated investment companies), or of any two or more issuers that are controlled by the Fund and that are engaged in the same or similar trades or businesses or related trades or businesses. The Fund generally will endeavor to distribute (or treat as deemed distributed) to its shareholders all of its investment company taxable income and its net capital gain, if any, for each taxable year so that it will not incur federal income or excise taxes on its earnings. In addition, in order to avoid a 4% nondeductible federal excise tax on certain of its undistributed income, the Fund generally must distribute in a timely manner the sum of (1) 98% of its ordinary income for each calendar year, (2) 98% of its capital gain net income for the one-year period ending October 31 in that calendar year, and (3) any income not distributed in prior years (the "excise tax avoidance requirements"). Investment income received from sources within foreign countries, or capital gains earned by the Fund from investing in securities of foreign issuers, may be subject to foreign income taxes withheld at the source. In this regard, withholding tax rates in countries with which the United States does not have a tax treaty are often as high as 35% or more. The United States has entered into tax treaties with many foreign countries that may entitle the Funds to a reduced rate of tax or exemption from tax on this related income and gains. The effective rate of foreign tax cannot be determined at this time since the amount of these Funds' assets to be invested within various countries is not now known. The Company intends that the Fund will seek to operate so as to qualify for treaty-reduced rates of tax when applicable. In addition, if the Fund qualifies as a regulated investment company under the Code, and if more than 50% of the Fund's total assets at the close of the taxable year consists of securities of foreign corporations, the Fund may elect, for U.S. federal income tax purposes, to treat foreign income taxes paid by the Fund (including certain withholding taxes) that can be treated as income taxes under U.S. income tax principles as paid by its shareholders. [Each Fund with "Global" and "International" in its name anticipates that it may qualify for and make this election in most, but not necessarily all, of its taxable years. If a Fund makes such an election, an amount equal to the foreign income taxes paid by the Fund would be included in the income of its shareholders and the shareholders often are entitled to credit their portions of this amount against their U.S. tax liabilities, if any, or to deduct those portions from their U.S. taxable income, if any. Shortly after any year for which it makes such an election, a Fund will report to its shareholders, in writing, the amount per share of foreign tax that must be included in each shareholder's gross income and the amount that will be available as a deduction or credit. Shareholders must itemize their deductions in order to deduct foreign taxes. Certain limitations may apply that could limit the extent to which the credit or the deduction for foreign taxes may be claimed by a shareholder.] The Fund's transactions in options contracts and futures contracts are subject to special provisions of the Code that, among other things, may affect the character of gains and losses realized by the Fund (that is, may affect whether gains or losses are ordinary or capital), accelerate recognition of income to the Fund and defer losses of the Fund. These rules (1) could affect the character, amount and timing of distributions to shareholders of the Fund, (2) could require the Fund to "mark to market" certain types of the positions in its portfolio (that is, treat them as if they were closed out) and (3) may cause the Fund to recognize income without receiving cash with which to make distributions in amounts necessary to satisfy the 90% distribution requirement and the excise tax avoidance requirements described above. The Company seeks to monitor transactions of the Fund, seeks to make the 38 appropriate tax elections on behalf of the Fund and seeks to make the appropriate entries in the Fund's books and records when the Fund acquires any option, futures contract or hedged investment, to mitigate the effect of these rules. If for any taxable year the Fund fails to qualify as a regulated investment company or fails to satisfy the 90% distribution requirement, then all of its taxable income becomes subject to federal, and possibly state and local, income tax at regular corporate rates (without any deduction for distributions to its shareholders) and distributions to its shareholders constitute dividend income (with such dividend income including dividends derived from interest on tax-exempt obligations) to the extent of such Fund's available earnings and profits. If the Fund acquires stock in certain foreign corporations that receive at least 75% of their annual gross income from passive sources (such as interest, dividends, rents, royalties or capital gain) or hold at least 50% of their total assets in investments producing such passive income ("passive foreign investment companies"), the Fund could be subject to federal income tax and additional interest charges on "excess distributions" received from such companies or gain from the sale of stock in such companies, even if all income or gain actually received by the Fund is timely distributed to its shareholders. The Fund would not be able to pass through to its shareholders any credit or deduction for such a tax. Certain elections may, if available, ameliorate these adverse tax consequences, but any such election requires the Fund to recognize taxable income or gain without the concurrent receipt of cash. The Fund may limit and/or manage its holdings in passive foreign investment companies to minimize its tax liability. Foreign exchange gains and losses realized by the Fund in connection with certain transactions involving non-dollar debt securities, certain foreign currency futures contracts, foreign currency option contracts, foreign currency forward contracts, foreign currencies, or payables or receivables denominated in a foreign currency are subject to Code provisions which generally treat such gains and losses as ordinary income and losses and may affect the amount, timing and character of distributions to shareholders. Any such transactions that are not directly related to the Fund's investment in securities (possibly including speculative currency positions or currency derivatives not used for hedging purposes) could, under future Treasury regulations, produce income not among the types of "qualifying income" from which the Fund must derive at least 90% of its annual gross income. The Fund that invests in certain PIKs, zero coupon securities or certain deferred interest securities (and, in general, any other securities with original issue discount or with market discount if the Fund elects to include market discount in current income) must accrue income on such investments prior to the receipt of the corresponding cash. However, because the Fund must meet the 90% distribution requirement to qualify as a regulated investment company, the Fund may have to dispose of its portfolio investments under disadvantageous circumstances to generate cash, or may have to leverage itself by borrowing the cash, to satisfy the applicable distribution requirements. The federal income tax rules applicable to interest rate swaps, caps and floors are unclear in certain respects, and the Fund may be required to account for these transactions in a manner that, in certain circumstances, may limit the degree to which it may utilize these transactions. SHAREHOLDER TAXATION The following discussion of certain federal income tax issues of shareholders of the Fund is a general and abbreviated summary based on tax laws and regulations in effect on the date of this statement of additional information. Tax law is subject to change by legislative, administrative or judicial action. The following discussion relates solely to U.S. federal income tax law as applicable to U.S. taxpayers (e.g., U.S. citizens or residents and U.S. domestic corporations, partnerships, trusts or estates). The discussion does not address special tax rules applicable to certain classes of investors, such as qualified retirement accounts or trusts, tax-exempt entities, insurance companies, banks and other financial institutions or to non-U.S. taxpayers. Dividends, capital gain distributions, and ownership of or gains realized on the redemption (including an exchange) of the shares of the Fund may also be subject to state and local taxes. This summary does not address any federal estate tax issues that may arise from ownership of Fund shares. Shareholders should consult their own tax advisers as to the federal, state and local tax consequences of ownership of shares of, and receipt of distributions from, the Fund in their particular circumstances. 39 [In general, as described in the prospectus, distributions from the Fund are generally taxable to shareholders as ordinary income, qualified dividend income, or long-term capital gains. Distributions of the Fund's investment company taxable income (other than qualified dividend income) are taxable as ordinary income to shareholders to the extent of the Fund's current or accumulated earnings and profits, whether paid in cash or reinvested in additional shares. The Fund may realize capital gain or loss in connection with sales or other dispositions of its portfolio securities. Any net capital gains may be distributed to the Fund as capital gain distributions. The Fund may also derive capital gains and losses in connection with sales of shares of the Fund. Distributions from net short-term capital gains are taxable to a shareholder as ordinary income. Distributions of the Fund's net capital gain properly designated by the Fund as "capital gain dividends" are taxable to a shareholder as long-term capital gain regardless of the shareholder's holding period for his or her shares and regardless of whether paid in cash or reinvested in additional shares. To the extent that the Fund derives dividends from domestic corporations, a portion of the income distributions of the Fund may be eligible for the 70% deduction for dividends received by corporations. Shareholders will be informed of the portion of dividends which so qualify. The dividends-received deduction is reduced to the extent the shares held by the Fund with respect to which the dividends are received are treated as debt-financed under federal income tax law and is eliminated if those shares of the Fund are deemed to have been held by the Fund or the shareholders, as the case may be, for less than 46 days during the 90-day period beginning 45 days before the shares become ex-dividend. Properly designated distributions of qualified dividend income generally are taxable to individual shareholders at the same rates that apply to long-term capital gains, if certain holding period and other requirements are met. Dividend distributions will not be eligible for the reduced rates applicable to qualified dividend income unless, among other things, the shares held by the Fund with respect to which dividends are paid, the shares of the Fund are deemed to have been held by the Fund and the shareholders, respectively, for more than 60 days during the 121-day period beginning 60 days before the shares become ex-dividend. Distributions, if any, in excess of earnings and profits usually constitute a return of capital, which first reduces an investor's tax basis in the Fund's shares and thereafter (after such basis is reduced to zero) generally gives rise to capital gains. Shareholders electing to receive distributions in the form of additional shares have a cost basis for federal income tax purposes in each share so received equal to the amount of cash they would have received had they elected to receive the distribution in cash. For a summary of the tax rates applicable to capital gains, including capital gain dividends, see the discussion below.] At the Company's option, the Company may cause the Fund to retain some or all of its net capital gain for a tax year, but may designate the retained amount as a "deemed distribution." In that case, among other consequences, the Fund pays tax on the retained amount for the benefit of its shareholders, the shareholders are required to report their share of the deemed distribution on their tax returns as if it had been distributed to them, and the shareholders may report a credit for the tax paid thereon by the Fund. The amount of the deemed distribution net of such tax is added to the shareholder's cost basis for his or her shares. Since the Company expects the Fund to pay tax on any retained net capital gain at its regular corporate capital gain tax rate, and since that rate is in excess of the maximum rate currently payable by individuals on long-term capital gain, the amount of tax that individual shareholders are treated as having paid will exceed the amount of tax that such shareholders would be required to pay on the retained net capital gain. A shareholder that is not subject to U.S. federal income tax or tax on long-term capital gain should be able to file a return on the appropriate form or a claim for refund that allows such shareholder to recover the taxes paid by the Fund on his or her behalf. In the event that the Company chooses this option on behalf of the Fund, the Company must provide written notice to the shareholders prior to the expiration of 60 days after the close of the relevant tax year. Any dividend declared by the Fund in October, November, or December of any calendar year, payable to shareholders of record on a specified date in such a month and actually paid during January of the following year, is treated as if it had been received by the shareholders on December 31 of the year in which the dividend was declared. An investor should consider the tax implications of buying shares just prior to a distribution (other than an exempt-interest dividend, described below). Even if the price of the shares includes the amount of the forthcoming distribution, the shareholder generally will be taxed upon receipt of the distribution and is not entitled to offset the distribution against the tax basis in his or her shares. In addition, an investor should be aware that, at the time he or she purchases shares of the Fund, a portion of the purchase price is often attributable to realized or unrealized appreciation in the Fund's portfolio or undistributed taxable income of the Fund. Subsequent distributions from such appreciation or income may be taxable to such investor even if the net asset value of the investor's shares is, as 40 a result of the distributions, reduced below the investor's cost for such shares, and the distributions in reality represent a return of a portion of the purchase price. A shareholder generally recognizes taxable gain or loss on a sale or redemption (including by exercise of the exchange privilege) of his or her shares. The amount of the gain or loss is measured by the difference between the shareholder's adjusted tax basis in his or her shares and the amount of the proceeds received in exchange for such shares. Any gain or loss arising from (or, in the case of distributions in excess of earnings and profits, treated as arising from) the sale or redemption of shares generally is a capital gain or loss if such shares are held as capital assets. This capital gain or loss normally is treated as a long-term capital gain or loss if the shareholder has held his or her shares for more than one year at the time of such sale or redemption; otherwise, it is classified as short-term capital gain or loss. If, however, a shareholder receives a capital gain dividend with respect to any share of the Fund, and if the share is sold before it has been held by the shareholder for at least six months, then any loss on the sale or exchange of the share, to the extent of the capital gain dividend, is treated as a long-term capital loss. In addition, all or a portion of any loss realized upon a taxable disposition of shares may be disallowed if other shares of the Fund are purchased (including any purchase through a reinvestment of distributions from the Fund) within 30 days before or after the disposition. In such a case, the basis of the shares acquired will be adjusted to reflect the disallowed loss. Also, if a shareholder who incurred a sales charge on the acquisition of shares of the Fund sells his or her shares within 90 days of purchase and subsequently acquires shares of the same or another Fund of the Company on which a sales charge normally is imposed without paying such sales charge in accordance with the exchange privilege described in the prospectuses, such shareholder will not be entitled to include the amount of the sales charge in his or her basis in the shares sold for purposes of determining gain or loss. In these cases, any gain on the disposition of the shares of the Fund is increased, or loss decreased, by the amount of the sales charge paid when the shares were acquired, and that amount will increase the adjusted basis of the shares of the Fund subsequently acquired. In general, non-corporate shareholders currently are subject to a maximum federal income tax rate of 15% on their net long-term capital gain (the excess of net long-term capital gain over net short-term capital loss) for a taxable year (including a long-term capital gain derived from an investment in the shares) and certain qualified dividend income, while other income may be taxed at rates as high as 35%. Corporate taxpayers currently are subject to federal income tax on net capital gain at the maximum 35% rate also applied to ordinary income. Tax rates imposed by states and local jurisdictions on capital gain and ordinary income may differ. Non-corporate shareholders with net capital losses for a year (i.e., capital losses in excess of capital gains) generally may deduct up to $3,000 of such losses against their ordinary income each year; any net capital losses of a non-corporate shareholder in excess of $3,000 generally may be carried forward and used in subsequent years as provided in the Code. Corporate shareholders generally may not deduct any net capital losses for a year, but may carry back such losses for three years or carry forward such losses for five years. The Fund's ordinary income dividends from domestic corporations may, if certain conditions are met, qualify for the dividends received deduction for corporate shareholders to the extent that the Fund has received qualifying dividend income during the taxable year; capital gain dividends distributed by the Fund are not eligible for the dividends received deduction. The dividends received deduction is reduced to the extent that the shares held by the Fund are treated as debt financed under federal income tax law and is eliminated if either those shares or the shares of the Fund are deemed to have been held by the Fund or a shareholder, as the case may be, for less than 46 days during the 90 day period that begins 45 days before the stock becomes ex dividend. The Fund sends to each of its shareholders, as promptly as possible after the end of each calendar year, a notice detailing, on a per share and per distribution basis, the amounts includible in such shareholder's taxable income for such year as ordinary income and as long-term capital gain. In addition, the federal tax status of each year's distributions generally is reported to the IRS. Distributions may also be subject to additional state, local, and foreign taxes depending on a shareholder's particular situation. The Fund may be required to withhold U.S. federal income tax at a rate of 28% ("backup withholding") from all taxable distributions payable to (1) any shareholder who fails to furnish the Company with its correct taxpayer identification number or a certificate that the shareholder is exempt from backup withholding, and (2) any shareholder with respect to whom the IRS notifies the Company that the shareholder has failed to properly report 41 certain interest and dividend income to the IRS and to respond to notices to that effect. An individual's taxpayer identification number is his or her social security number. The 28% backup withholding tax is not an additional tax and may be credited against a taxpayer's regular federal income tax liability. PRINCIPAL UNDERWRITER HIFSCO, the investment manager of the Fund, also serves as the principal underwriter. HIFSCO is located at 200 Hopmeadow Street, Simsbury, Connecticut 06089. CUSTODIAN Portfolio securities of the Fund are held pursuant to a separate Custody Agreement between the Company and State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts 02110. TRANSFER AGENT Hartford Administrative Services Company ("HASCO"), 500 Bielenberg Drive, Woodbury, Minnesota 55125, is the transfer agent for the Fund. As transfer agent, HASCO, among other things, receives and processes purchase and redemption orders, effects transfers of shares, prepares and transmits payments for dividends and distributions, and maintains records of account. For its services, HASCO is paid a fee based on assets or number of accounts, depending on the class of shares. INDEPENDENT AUDITORS The financial statements and the financial highlights will be audited by _______________, independent auditors to the Fund. The principal business address of ________________ is ____________________. OTHER INFORMATION The Hartford has granted the Company the right to use the name, "The Hartford" or "Hartford", and has reserved the right to withdraw its consent to the use of such name by the Company and the Fund at any time, or to grant the use of such name to any other company. PROXY VOTING POLICIES AND PROCEDURES The Fund has granted to its respective subadvisers the authority to vote proxies on its behalf with respect to the assets managed by the subadvisors. A summary of each subadviser's proxy voting policies and procedures is set forth in Appendix B to this SAI. FINANCIAL STATEMENTS An annual report for the Fund will be available once the Fund has completed its first annual period. 42 APPENDIX The rating information which follows describes how the rating services mentioned presently rate the described securities. No reliance is made upon the rating firms as "experts" as that term is defined for securities purposes. Rather, reliance on this information is on the basis that such ratings have become generally accepted in the investment business. RATING OF BONDS MOODY'S INVESTORS SERVICE, INC. ("MOODY'S") Aaa - Bonds which are rated Aaa are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge." Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Aa - Bonds which are rated Aa are judged to be of high quality by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make the long term risks appear somewhat larger than in Aaa securities. A - Bonds which are rated A possess many favorable investment attributes and are to be considered as upper medium grade obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. Baa - Bonds which are rated Baa are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. Ba - Bonds which are rated Ba are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. B - Bonds which are rated B generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Caa - Bonds which are rated Caa are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Ca - Bonds which are rated Ca represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings. C - Bonds which are rated C are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever earning any real investment standing. STANDARD AND POOR'S CORPORATION ("STANDARD & POOR'S") AAA - Bonds rated AAA are the highest grade obligations. Capacity to pay interest and repay principal is extremely strong. AA - Bonds rated AA have a very strong capacity to pay interest and repay principal and differ from AAA issues only in small degree. A-1 A - Bonds rated A have a very strong capacity to pay interest and repay principal although they are somewhat more susceptible to adverse effects of changes in circumstances and economic conditions than debt in the highest rated categories. BBB - Bonds rated BBB and regarded as having an adequate capacity to pay interest and repay principal. Whereas they normally exhibit adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category then in higher rated categories. BB, B, CCC, CC, C - Debt rated BB, B, CCC, CC, and C is regarded, on balance, as predominantly speculative with respect to the issuer's capacity to pay interest and repay principal in accordance with the terms of the obligation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. RATING OF COMMERCIAL PAPER MOODY'S Issuers rated Prime-1 (or related supporting institutions) have a superior capacity for repayment of short-term promissory obligations. Prime-1 repayment capacity will normally be evidenced by the following characteristics: - Leading market positions in well-established industries. - High rates of return on funds employed. - Conservative capitalization structures with moderate reliance on debt and ample asset protection. - Broad margins in earnings coverage of fixed financial charges and high internal cash generation. - Well-established access to a range of financial markets and assured sources of alternate liquidity. Issuers rated Prime-2 (or related supporting institutions) have a strong capacity for repayment of short-term promissory obligations. This will normally be evidenced by many of the characteristics cited above but to a lesser degree. Earnings trends and coverage ratios, while sound, will be more subject to variation. Capitalization characteristics, while still appropriate, may be more affected by external conditions. Ample alternate liquidity is maintained. Issuers rated Prime-3 (or related supporting institutions) have an acceptable capacity for repayment of short-term promissory obligations. The effect of industry characteristics and market composition may be more pronounced. Variability in earnings and profitability may result in changes in the level of debt protection measurements and the requirement for relatively high financial leverage. Adequate alternate liquidity is maintained. Issuers rated Not Prime do not fall within any of the Prime rating categories. STANDARD & POOR'S The relative strength or weakness of the following factors determines whether the issuer's commercial paper is rated A-1 or A-2. - Liquidity ratios are adequate to meet cash requirements. Liquidity ratios are basically as follows, broken down by the type of issuer: A-2 Industrial Company: acid test ratio, cash flow as a percent of current liabilities, short-term debt as a percent of current liabilities, short-term debt as a percent of current assets. Utility: current liabilities as a percent of revenues, cash flow as a percent of current liabilities, short-term debt as a percent of capitalization. Finance Company: current ratio, current liabilities as a percent of net receivables, current liabilities as a percent of total liabilities. - The long-term senior debt rating is "A" or better; in some instances "BBB" credits may be allowed if other factors outweigh the "BBB". - The issuer has access to at least two additional channels of borrowing. - Basic earnings and cash flow have an upward trend with allowances made for unusual circumstances. - Typically, the issuer's industry is well established and the issuer has a strong position within its industry. - The reliability and quality of management are unquestioned. RATING OF TAX EXEMPT BONDS STANDARD & POOR'S RATINGS SERVICES. Its ratings for municipal debt have the following definitions: Debt rated "AAA" has the highest rating assigned by Standard & Poor's. Capacity to pay interest and repay principal is extremely strong. Debt rated "AA" has a very strong capacity to pay interest and repay principal and differs from the higher rated issues only in a small degree. Debt rated "A" has a strong capacity to pay interest and repay principal, although it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than debt in higher rated categories. Debt rated "BBB" is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection parameters, adverse economic conditions or changing circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories. Debt rated "BB", "B", "CCC" and "CC" is regarded, on balance, as predominantly speculative with respect to capacity to pay interest and repay principal in accordance with the terms of the obligation. "BB" indicates the lowest degree of speculation and "C" the highest degree of speculation. While such debt will likely have some quality and protective characteristics, these are outweighed by large uncertainties or major risk exposures to adverse conditions. Debt rated "BB" has less near-term vulnerability to default than other speculative issues. However, it faces major ongoing uncertainties or exposure to adverse business, financial, or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The "BB" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "BBB-" rating. Debt rated "B" has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial, or economic conditions will likely impair capacity or willingness to pay interest and repay principal. The "B" rating category is also used for debt subordinated to senior debt that is assigned an actual or implied "BB" or ""BB" rating. A-3 Debt rated "CCC" has a currently identifiable vulnerability to default, and is dependent upon favorable business, financial, and economic conditions to meet timely payment of interest and repayment of principal. In the event of adverse business, financial, or economic conditions, it is not likely to have the capacity to pay interest and repay principal. The "CCC" rating category is also used to debt subordinated to senior debt that is assigned an actual or implied "B" or "B-" rating. The rating "CC" is typically applied to debt subordinated to senior debt that is assigned an actual or implied "CCC" rating. The rating "C" is typically applied to debt subordinated to senior debt which is assigned an actual or implied "CCC-" debt rating. The "C" rating may be used to cover a situation where a bankruptcy petition has been filed, but debt service payments are continued. The rating "CI" is reserved for income bonds on which no interest is being paid. Debt rated "D" is in payment default. The "D" rating category is used when interest payments or principal payments are not made on the date due even if the applicable grace period has not expired, unless Standard & Poor's believes that such payments will be made during such grace period. The "D" rating also will be used upon the filing of a bankruptcy petition if debt service payments are jeopardized. The ratings from "AA" to "CCC" may be modified by the addition of a plus or minus sign to show relative standing within the major categories. "NR" indicates that no rating has been requested, that there is insufficient information on which to base a rating, or that Standard & Poor's does not rate a particular type of obligation as a matter of policy. BOND INVESTMENT QUALITY STANDARDS: Under present commercial bank regulations issued by the Comptroller of the Currency, bonds rated in the top four categories (AAA, A, BBB, commonly known as "Investment Grade" ratings) are generally regarded as eligible for bank investment. In addition, the legal investment laws of various states impose certain rating or other standards for obligations eligible for investment by savings banks, trust companies, insurance companies, and fiduciaries generally. MOODY'S INVESTORS SERVICE, INC.: Its ratings for municipal bonds include the following: Bonds which are rated "Aaa" are judged to be of the best quality. They carry the smallest degree of investment risk and are generally referred to as "gilt edge". Interest payments are protected by a large or by an exceptionally stable margin and principal is secure. While the various protective elements are likely to change, such changes as can be visualized are most unlikely to impair the fundamentally strong position of such issues. Bonds which are rated "Aa" are judged to be of high qualify by all standards. Together with the Aaa group they comprise what are generally known as high grade bonds. They are rated lower than the best bonds because margins of protection may not be as large as in Aaa securities or fluctuation of protective elements may be of greater amplitude or there may be other elements present which make long-term risk appear somewhat larger than in Aaa securities. Bonds which are rated "A" possess many favorable attributes and are to be considered as upper medium grate obligations. Factors giving security to principal and interest are considered adequate but elements may be present which suggest a susceptibility to impairment sometime in the future. Bonds which are rated "Baa" are considered as medium grade obligations, i.e., they are neither highly protected nor poorly secured. Interest payments and principal security appear adequate for the present but certain protective elements may be lacking or may be characteristically unreliable over any great length of time. Such bonds lack outstanding investment characteristics and in fact have speculative characteristics as well. A-4 Bonds which are rated "Ba" are judged to have speculative elements; their future cannot be considered as well assured. Often the protection of interest and principal payments may be very moderate and thereby not well safeguarded during both good and bad times over the future. Uncertainty of position characterizes bonds in this class. Bonds which are rated "B" generally lack characteristics of the desirable investment. Assurance of interest and principal payments or of maintenance of other terms of the contract over any long period of time may be small. Bonds which are rated "Caa" are of poor standing. Such issues may be in default or there may be present elements of danger with respect to principal or interest. Bonds which are rated "Ca" represent obligations which are speculative in a high degree. Such issues are often in default or have other marked shortcomings. Bonds which are rated "C" are the lowest rated class of bonds and issues so rated can be regarded as having extremely poor prospects of ever attaining any real investment standing. RATING OF MUNICIPAL NOTES AND OTHER SHORT-TERM LOANS STANDARD & POOR'S RATINGS SERVICES. A Standard & Poor's note rating reflects the liquidity concerns and market access risks unique to notes. Notes due in three years or less will likely receive a note rating. Notes maturing beyond three years will most likely receive a long-term debt rating. Note rating symbols are as follows: SP-1 - Very strong or strong capacity to pay principal and interest. Those issues determined to possess overwhelming safety characteristics will be given a plus (+) designation. SP-2 - Satisfactory capacity to pay principal and interest. SP-3 - Speculative capacity to pay principal and interest. MOODY'S INVESTORS SERVICES. Moody's ratings for state and municipal notes and other short-term loans are designated Moody's Investment Grade (MIG). This distinction is in recognition of the differences between short-term credit risk and long-term risk. Factors affecting the liquidity of the borrower and short-term cyclical elements are critical in short-term ratings, while other factors of major importance in bond risk may be less important over the short run. In the case of variable rate demand obligations, two ratings are assigned: one representing an evaluation of the degree of risk associated with scheduled principal and interest payments, and the other representing an evaluation of the degree of risk associated with the demand feature. The short-term rating assigned to the demand feature of variable rate demand obligations is designated as VMIG. Moody's ratings for short-term loans have the following definitions: MIG-1/VMIG-1. This designation denotes best quality. There is present strong protection by established cash flows, superior liquidity support, or demonstrated broad-based access to the market for refinancing. MIG-2/VMIG-2. This designation denotes high quality. Margins of protection are ample although not so large as in the preceding group. MIG-3/VMIG-3. This designation denotes favorable quality. All security elements are accounted for but there is lacking the undeniable strength of the preceding grades. Liquidity and cash flow protection may be narrow and market access for refinancing is likely to be less well established. MIG-4/VMIG-4. This designation denotes adequate quality. Protection commonly regarded as required of an investment security is present and although not distinctly or predominantly speculative, there is specific risk. A-5 RATING OF TAX-EXEMPT DEMAND BONDS Standard & Poor's assigns "dual" ratings to all long-term debt issues that have as part of their provisions a demand or double feature. The first rating addresses the likelihood of repayment of principal and interest as due, and the second rating addresses only the demand feature. The long-term debt rating symbols are used for bonds to denote the long-term maturity and the commercial paper rating symbols are used to denote the put option (for example, "AAA/A-1+"). For the newer "demand notes", Standard & Poor's note rating symbols, combined with the commercial paper symbols, are used (for example, "SP-1+/A-1+"). INTERNATIONAL LONG-TERM CREDIT RATINGS FITCH, INC. The following ratings scale applies to foreign currency and local currency ratings. INVESTMENT GRADE AAA Highest credit quality. "AAA" ratings denote the lowest expectation of credit risk. They are assigned only in case of exceptionally strong capacity for timely payment of financial commitments. This capacity is highly unlikely to be adversely affected by foreseeable events. AA Very high credit quality. "AA" ratings denote a very low expectation of credit risk. They indicate very strong capacity for timely payment of financial commitments. This capacity is not significantly vulnerable to foreseeable events. A High credit quality. "A" ratings denote a low expectation of credit risk. The capacity for timely payment of financial commitments is considered strong. This capacity may, nevertheless, be more vulnerable to changes in circumstances or in economic conditions than is the case for higher ratings. BBB Good credit quality. "BBB" ratings indicate that there is currently a low expectation of credit risk. The capacity for timely payment of financial commitments is considered adequate, but adverse changes in circumstances and in economic conditions are more likely to impair this capacity. This is the lowest investment-grade category. SPECULATIVE GRADE BB Speculative. "BB" ratings indicate that there is a possibility of credit risk developing, particularly as the result of adverse economic change over time; however, business or financial alternatives may be available to allow financial commitments to be met. Securities rated in this category are not investment grade. B Highly speculative. "B" ratings indicate that significant credit risk is present, but a limited margin of safety remains. Financial commitments are currently being met; however, capacity for continued payment is contingent upon a sustained, favorable business and economic environment. CCC, CC, C High default risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon sustained, favorable business or economic developments. A "CC" rating indicates that default of some kind appears probable. "C" ratings signal imminent default. A-6 DDD, DD, D Default. The ratings of obligations in this category are based on their prospects for achieving partial or full recovery in a reorganization or liquidation of the obligor. While expected recovery values are highly speculative and cannot be estimated with any precision, the following serve as general guidelines. "DDD" obligations have the highest potential for recovery, around 90% - 100% of outstanding amounts and accrued interest. "DD" indicates potential recoveries in the range of 50% - 90% and "D" the lowest recovery potential, i.e., below 50%. Entities rated in this category have defaulted on some or all of their obligations. Entities rated "DDD" have the highest prospect for resumption of performance or continued operation with or without a formal reorganization process. Entities rated "DD" and "D" are generally undergoing a formal reorganization or liquidation process; those rated "DD" are likely to satisfy a higher portion of their outstanding obligations, while entities rated "D" have a poor prospect of repaying all obligations. INTERNATIONAL SHORT-TERM CREDIT RATINGS FITCH, INC. The following ratings scale applies to foreign currency and local currency ratings. A Short-term rating has a time horizon of less than 12 months for most obligations, or up to three years for US public finance securities, and thus places greater emphasis on the liquidity necessary to meet financial commitments in a timely manner. F1 Highest credit quality. Indicates the strongest capacity for timely payment of financial commitments; may have an added "+" to denote any exceptionally strong credit feature. F2 Good credit quality. A satisfactory capacity for timely payment of financial commitments, but the margin of safety is not as great as in the case of the higher ratings. F3 Fair credit quality. The capacity for timely payment of financial commitments is adequate; however, near-term adverse changes could result in a reduction to non-investment grade. B Speculative. Minimal capacity for timely payment of financial commitments, plus vulnerability to near-term adverse changes in financial and economic conditions. C High default risk. Default is a real possibility. Capacity for meeting financial commitments is solely reliant upon a sustained, favorable business and economic environment. D Default. Denotes actual or imminent payment default. NOTES TO LONG-TERM AND SHORT-TERM RATINGS: "+" or "-" may be appended to a rating to denote relative status within major rating categories. Such suffixes are not added to the "AAA" Long-term rating category, to categories below "CCC", or to Short-term ratings other than "F1". "NR" indicates that Fitch Ratings does not rate the issuer or issue in question. "Withdrawn": A rating is withdrawn when Fitch Ratings deems the amount of information available to be inadequate for rating purposes, or when an obligation matures, is called, or refinanced. Rating Watch: Ratings are placed on Rating Watch to notify investors that there is a reasonable probability of a rating change and the likely direction of such change. These are designated as "Positive", indicating a potential A-7 upgrade, "Negative", for a potential downgrade, or "Evolving", if ratings may be raised, lowered or maintained. Rating Watch is typically resolved over a relatively short period. A Rating Overlook indicates the direction a rating is likely to move over a one to two-year period. Outlooks may be positive, stable or negative. A positive or negative Rating Outlook does not imply a rating change is inevitable. Similarly, ratings for which outlooks are "stable" could be upgraded or downgraded before an outlook moves to positive or negative if circumstances warrant such an action. Occasionally, Fitch Ratings may be unable to identify the fundamental trend. In these cases, the Rating Outlook may be described as evolving. A-8 APPENDIX B CHARTWELL INVESTMENT PARTNERS -- SUMMARY OF PROXY VOTING POLICIES AND PROCEDURES Investment Advisers Act Rule 206(4)-6 requires every SEC-registered adviser that exercises proxy voting authority over client securities to: - Adopt and follow written proxy voting policies and procedures; - Provide clients with a summary of those policies and procedures; - Let clients know how to obtain copies of the adviser's proxy voting policies and procedures as well as information about how the adviser voted their proxies; and - Keep certain records relating to proxy voting. Chartwell's policy is to vote all client proxies in the client's best interests. We seek to achieve this result by voting in the manner that, in our judgment, is most likely to maximize total return to the client as an investor in the securities being voted. We have developed written proxy voting policies, procedures and guidelines for voting specific types of proposals. We have established a Proxy Voting Committee to oversee and manage the process by which we vote proxies on behalf of clients who have entrusted us with this authority. We have retained Institutional Shareholder Services, Inc., a well-known, independent proxy voting service, to provide us analyses of proxy voting proposals, recommendations on how to vote and to assist us in managing the process of casting votes in a timely manner and keeping track of our voting record. In the past, we have relied on ISS' analyses and recommendations to guide our proxy voting decisions, and we generally vote in accordance with those recommendations, unless we reach a different conclusion about how a particular proposal should be voted. We expect to continue to do so. In the event we identify a conflict of interest between our interests and those of our clients on any proxy voting issue, we vote the proxy in accordance with our written proxy voting guidelines, or, if our guidelines do not specify how the vote will be cast, we will defer to ISS' recommendation on that matter. We will update our proxy voting policies, procedures and guidelines from time to time as conditions dictate, and will make copies available to you on request. Our voting record also is available to you in printed form or electronically. Should you desire a copy of our proxy voting policies and procedures, including our voting guidelines, or information on how we voted proxies on your behalf, please contact Maria Pollack, Partner/Director of Client Administration, at (610)407-4838. B-1 GOLDMAN SACHS ASSET MANAGEMENT, L.P. -- SUMMARY OF PROXY VOTING POLICIES AND PROCEDURES Proxy voting and Goldman Sachs' understanding of corporate governance issues are important elements of the portfolio management services Goldman Sachs' performs for our advisory clients who have authorized us to address these matters on their behalf. Goldman Sachs has adopted policies and procedures (the "Policy") for the voting of proxies on behalf of client accounts for which we have voting discretion. Under the Policy, Goldman Sachs' guiding principles in performing proxy voting are to make decisions that: (i) favor proposals that tend to maximize a company's shareholder value; and (ii) are not influenced by conflicts of interest. These principles reflect Goldman Sachs' belief that sound corporate governance will create a framework within which a company can be managed in the interests of its shareholders. The principles and positions reflected in the Policy are designed to guide Goldman Sachs in voting proxies, and not necessarily in making investment decisions. Senior management of Goldman Sachs will periodically review the Policy to ensure that it continues to be consistent with Goldman Sachs' guiding principles. PUBLIC EQUITY INVESTMENTS. To implement these guiding principles for investments in publicly-traded equities, Goldman Sachs follows proxy voting guidelines (the "Guidelines") developed by Institutional Shareholder Services ("ISS"), except in certain circumstances, which are generally described below. The Guidelines embody the positions and factors Goldman Sachs' generally considers important in casting proxy votes. They address a wide variety of individual topics, including, among others, shareholder voting rights, anti-takeover defenses, board structures, the election of directors, executive and director compensation, reorganizations, mergers, and various shareholder proposals. ISS has been retained to review proxy proposals and make voting recommendations in accordance with the Guidelines. While it is Goldman Sachs' policy generally to follow the Guidelines and recommendations from ISS, the Goldman Sachs' portfolio management teams ("Portfolio Management Teams") retain the authority on any particular proxy vote to vote differently from the Guidelines or a related ISS recommendation, in keeping with their different investment philosophies and processes. Such decisions, however, remain subject to a review and approval process, including a determination that the decision is not influenced by any conflict of interest. In forming their views on particular matters, the Portfolio Management Teams are also permitted to consider applicable regional rules and practices, including codes of conduct and other guides, regarding proxy voting, in addition to the Guidelines and recommendations from ISS. In addition to assisting Goldman Sachs in developing substantive proxy voting positions, ISS also updates and revises the Guidelines on a periodic basis, and the revisions are reviewed by Goldman Sachs to determine whether they are consistent with Goldman Sachs' guiding principles. ISS also assists Goldman Sachs' in the proxy voting process by providing operational, recordkeeping and reporting services. Goldman Sachs is responsible for reviewing its relationship with ISS and for evaluating the quality and effectiveness of the various services provided by ISS. Goldman Sachs may hire other service providers to replace or supplement ISS with respect to any of the services the Investment Adviser currently receives from ISS. Goldman Sachs has implemented procedures that are intended to prevent conflicts of interest from influencing proxy voting decisions. These procedures include Goldman Sachs' use of ISS as an independent third party, a review and approval process for individual decisions that do not follow ISS's recommendations, and the establishment of information barriers between Goldman Sachs and other businesses within The Goldman Sachs Group, Inc. FIXED INCOME AND PRIVATE INVESTMENTS. Voting decisions with respect to fixed income securities and the securities of privately held issuers generally will be made by a Fund's managers based on their assessment of the particular transactions or other matters at issue. B-2 NORTHERN CAPITAL MANAGEMENT, LLC -- SUMMARY OF PROXY VOTING POLICIES AND PROCEDURES In accordance with SEC Rule 206(4)-6, under the Investment Advisers Act of 1940, this letter summarizes Northern Capital's proxy voting policies. DESCRIPTION OF NORTHERN CAPITALS' PROXY VOTING POLICIES AND PROCEDURES: As part of its advisory service, Northern Capital will vote proxies of portfolio securities on matters such as corporate governance, mergers, acquisitions, reorganizations, and stock splits. A client is asked to make an election as to proxy voting authority in Northern Capital's investment management agreement. If a client does not indicate its election, Northern Capital will assume that the client wishes to confer authority on Northern Capital to vote proxies. Northern Capital votes such proxies in accordance with its Proxy Voting Policies and Procedures ("Policies"). The general principal of the Policies is to vote proxies consistent with the best interests of advisory clients considering all relevant factors. Proxy research and recommendations are received through a third party proxy voting service. To ensure that votes are cast in the best interest of each client, Northern Capital's Investment Committee reviews all research and recommendations before making a final voting decision. Northern Capital's Policies give a general indication as to how proxies are voted or what factors are taken into consideration when voting on various issues. The Policies also address record keeping requirements and the steps that will be taken to resolve any potential conflicts of interest. B-3 PART C OTHER INFORMATION Item 22. Exhibits a.(i) Articles of Incorporation dated March 19, 1996 (incorporated by reference to Initial Registration Statement filed on April 9, 1996) a.(ii) Articles Supplementary dated August 30, 2002 (incorporated by reference to Post-Effective Amendment #23 filed on October 25, 2002) a.(iii) Articles Supplementary dated September 12, 2002 (incorporated by reference to Post-Effective Amendment #23 filed on October 25, 2002) a.(iv) Articles of Amendment to the Articles of Incorporation (incorporated by reference to Post-Effective Amendment #24 filed on December 16, 2002) a.(v) Articles Supplementary dated June 10, 2003 (incorporated by reference to Post-Effective Amendment #27 filed on August 19, 2003) a.(vi) Articles of Amendment dated June 10, 2003 (incorporated by reference to Post-Effective Amendment #27 filed on August 19, 2003) a.(vii) Articles Supplementary dated August 26, 2003 (incorporated by reference to Post-Effective Amendment #28 filed on December 15, 2003) a.(viii) Articles Supplementary dated March 10, 2004 (incorporated by reference to Post-Effective amendment #35 filed on May 19, 2004) b. By-Laws adopted January 24, 1996, last amended May 13, 2003 (incorporated by reference to Post-Effective Amendment #27 filed on August 19, 2003) c. Not Applicable d.(i) Investment Management Agreement with Hartford Investment Financial Services Company dated March 3, 1997 (incorporated by reference to Post-Effective Amendment #3 filed on June 20, 1997) d.(ii) Amendment Number 1 to Investment Management Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) d.(iii) Amendment Number 2 to Investment Management Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003)
d.(iv) Amendment Number 3 to Investment Management Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) d.(v) Amendment Number 4 to Investment Management Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) d.(vi) Amendment Number 5 to Investment Management Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) d.(vii) Amendment Number 6 to Investment Management Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) d.(viii) Amendment Number 7 to Investment Management Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) d.(ix) Amendment Number 8 to Investment Management Agreement (incorporated by reference to Post-Effective Amendment #28 filed on December 15, 2003) d.(x) Form of Amendment Number 9 to Investment Management Agreement (incorporated by reference to Post-Effective Amendment #35 filed on May 19, 2004) d.(xi) Form of Amendment Number 10 to Investment Management Agreement (to be filed by amendment) d.(xii) Investment Sub-Advisory Agreement with Wellington Management Company, LLP dated March 3, 1997 (incorporated by reference to Post-Effective Amendment #3 filed on June 20, 1997) d.(xiii) Amendment Number 1 to Investment Sub-Advisory Agreement with Wellington Management Company, LLP (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) d.(xiv) Amendment Number 2 to Investment Sub-Advisory Agreement with Wellington Management Company, LLP (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) d.(xv) Amendment Number 3 to Investment Sub-Advisory Agreement with Wellington Management Company, LLP (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) d.(xvi) Amendment Number 4 to Investment Sub-Advisory Agreement with Wellington Management Company, LLP (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003)
d.(xvii) Amendment Number 5 to Investment Sub-Advisory Agreement with Wellington Management Company, LLP (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) d.(xviii) Amendment Number 6 to Investment Sub-Advisory Agreement with Wellington Management Company, LLP (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) d.(xix) Amendment Number 7 to Sub-Advisory Agreement with Wellington Management Company, LLP (incorporated by reference to Post-Effective Amendment #28 filed on December 15, 2003) d.(xx) Investment Services Agreement with Hartford Investment Management Company dated as of March 3, 1997 (incorporated by reference to Post-Effective Amendment #3 filed on June 20, 1997) d.(xxi) Amendment Number 1 to Investment Services Agreement with Hartford Investment Management Company (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) d.(xxii) Amendment Number 2 to Investment Services Agreement with Hartford Investment Management Company (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) d.(xxiii) Form of Investment Sub-Advisory Agreement with Chartwell Investment Partners (to be filed by amendment) d.(xxiv) Form of Investment Sub-Advisory Agreement with Goldman Sachs Asset Management, L.P. (to be filed by amendment) d.(xxv) Form of Investment Sub-Advisory Agreement with Northern Capital Management, LLC (to be filed by amendment) e.(i) Principal Underwriting Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) e.(ii) Form of Dealer Agreement with the Distributor (incorporated by reference to Pre-Effective Amendment #1 filed on June 27, 1996) e.(iii) Amendment Number 1 to Principal Underwriting Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) e.(iv) Amendment Number 2 to Principal Underwriting Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003)
e.(v) Amendment Number 3 to Principal Underwriting Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) e.(vi) Assignment of Principal Underwriting Agreement from Hartford Securities Distribution Company, Inc. to Hartford Investment Financial Services Company dated November 1, 1998 (incorporated by reference to Post-Effective Amendment #20 filed on February 15, 2002) e.(vii) Amendment Number 4 to Principal Underwriting Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) e.(viii) Amendment Number 5 to Principal Underwriting Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) e.(ix) Amendment Number 6 to Principal Underwriting Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) e.(x) Amendment Number 7 to Principal Underwriting Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) e.(xi) Amendment Number 8 to Principal Underwriting Agreement (incorporated by reference to Post-Effective Amendment #28 filed on December 15, 2003) e.(xii) Form of Amendment Number 9 to Principal Underwriting Agreement (incorporated by reference to Post-Effective Amendment #35 filed on May 19, 2004) e.(xiii) Form of Amendment Number 10 to Principal Underwriting Agreement (to be filed by amendment) f. Not Applicable g.(i) Custodian Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) g.(ii) Amendment Number 1 to Custodian Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) g.(iii) Amendment Number 2 to Custodian Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) g.(iv) Amendment Number 3 to Custodian Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) g.(v) Letter Amendment to Custodian Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003)
g.(vi) Letter Amendment to Custodian Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) g.(vii) Letter Amendment to Custodian Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) g.(viii) Amendment Number 4 to Custodian Agreement (incorporated by reference to Post-Effective Amendment #24 filed on December 16, 2002) g.(ix) Letter Amendment to Custodian Agreement (incorporated by reference to Post-Effective Amendment #28 filed on December 15, 2003) g.(x) Tenth Amendment to Custodian Contract (incorporated by reference to Post-Effective Amendment #29 filed on January 29, 2004) g.(xi) Form of Eleventh Amendment to Custodian Contract (incorporated by reference to Post-Effective Amendment #35 filed on May 19, 2004) g.(xii) Form of Twelveth Amendment to Custodian Contract (to be filed by amendment) g.(xiii) Remote Services Agreement - State Street Bank and Trust Company (incorporated by reference to Post-Effective Amendment #26 filed on June 6, 2003) h.(i) Transfer Agency and Service Agreement between The Hartford Mutual Funds, Inc. and Hartford Administrative Services Company dated November 1, 2001 (incorporated by reference to Post-Effective Amendment #20 filed on February 15, 2002) h.(ii) Amendment Number 1 to Transfer Agency and Service Agreement (incorporated by reference to Post-Effective Amendment #25 filed on February 28, 2003) h.(iii) Amendment Number 2 to Transfer Agency and Service Agreement (incorporated by reference to Post-Effective Amendment #28 filed on December 15, 2003) h.(iv) Form of Amendment Number 3 to Transfer Agency and Service Agreement (incorporated by reference to Post-Effective Amendment #35 filed on May 19, 2004) h.(v) Form of Amendment Number 4 to Transfer Agency and Service Agreement (to be filed by amendment) h.(vi) Share Purchase Agreement (incorporated by reference to Post-Effective Amendment #35 filed on May 19, 2004)
i. Opinion and Consent of Counsel (to be filed by amendment) j. Consent of Independent Auditors (to be filed by amendment) k. Not Applicable l. Not Applicable m.(i) Amended and Restated Rule 12b-1 Distribution Plan for Class A, Class B and Class C Shares (incorporated by reference to Post-Effective Amendment #35 filed on May 19, 2004) m.(ii) Form of Amended and Restated Rule 12b-1 Distribution Plan for Class A, Class B and Class C Shares (to be filed by amendment) n.(i) Multiple Class Plan Pursuant to Rule 18f-3 (incorporated by reference to Post-Effective Amendment #35 filed on May 19, 2004) n.(ii) Form of Multiple Class Plan Pursuant to Rule 18f-3 (to be filed by amendment) o. Not Applicable p.(i) Code of Ethics of HL Investment Advisors, LLC, Hartford Investment Financial Services, LLC and The Hartford-Sponsored Mutual Funds (incorporated by reference to Post-Effective Amendment #24 filed on December 16, 2002) p.(ii) Code of Ethics of Hartford Investment Management Company and Hartford Investment Services, Inc. (incorporated by reference to Post-Effective Amendment #28 filed on December 15, 2003) p.(iii) Code of Ethics of Wellington Management Company, LLP (incorporated by reference to Post-Effective Amendment #30 filed on February 27, 2004) p.(iv) Code of Ethics of Chartwell Investment Partners (to be filed by amendment) p.(v) Code of Ethics of Goldman Sachs Asset Management, L.P. (to be filed by amendment) p.(vi) Code of Ethics of Northern Capital Management, LLC (to be filed by amendment) q.(i) Power of Attorney (incorporated by reference to Post-Effective Amendment #28 filed on December 15, 2003) q.(ii) Certified copy of Board Resolution (incorporated by reference to Post-Effective Amendment #24 filed on December 16, 2002)
Item 23. Persons controlled by or under Common Control with Registrant As of September 30, 2004, any persons directly or indirectly under common control with The Hartford Mutual Funds, Inc. are affiliates of, and are controlled by, The Hartford Financial Services Group, Inc., a Delaware corporation. Information about all such persons is incorporated herein by reference to the Form 10-K of The Hartford Financial Services Group, Inc. filed on February 27, 2004. In addition, subsidiaries of The Hartford Financial Services Group, Inc., beneficially owned as of September 30, 2004 more than 25% of the following funds: The Hartford Global Communications Fund The Hartford Global Financial Services Fund The Hartford Tax-Free California Fund The Hartford Tax-Free New York Fund Item 24. Indemnification Article V of the Registrant's Articles of Incorporation dated March 19, 1996 and incorporated herein by reference to Registrant's initial registration statement on April 9, 1996 provides in effect that the Registrant will indemnify its officers and directors under certain circumstances. However, in accordance with Section 17(h) and 17(i) of the Investment Company Act of 1940 and its own terms, Article V does not protect any person against liability to the Registrant or its shareholders to which such Director would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence, or reckless disregard of the duties involved in the conduct of his office. The rights of indemnification contained in Article V are not exclusive to any other rights to which any officer, director or employee seeking indemnification may be entitled. Subsection (b) of Section 2-418 of the General Corporation Law of Maryland permits a corporation to indemnify any person who was or is party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation or enterprise, against reasonable expenses (including attorneys' fees), judgments, penalties, fines and amounts paid in settlement actually incurred by him in connection with such action, suit or proceeding unless it is proved that: (i) the act or omission of the person was material to the cause of action adjudicated in the proceeding and was committed in bad faith or was the result of active and deliberate dishonesty; (ii) the person actually received an improper personal benefit of money, property or services; or (iii) with respect to any criminal action or proceeding, the person had reasonable cause to believe his act or omission was unlawful. Indemnification under subsection (b) of Section 2-418 may not be made by a corporation unless authorized for a specific proceeding after a determination has been made that indemnification is permissible in the circumstances because the party to be indemnified has met the standard of conduct set forth in subsection (b). This determination shall be made (i) by the Board of Directors by a majority vote of a quorum consisting of directors not, at the time, parties to the proceeding, or, if such quorum cannot be obtained, then by a majority vote of a committee of the Board consisting solely of two or more directors not, at the time, parties to such proceeding an who were duly designated to act in the matter by a majority vote of the full Board in which the designated directors who are parties may participate; (ii) by special legal counsel selected by the Board of Directors or a committee of the Board by vote as set forth in subparagraph (i), or, if the requisite quorum of the full Board cannot be obtained therefor and the committee cannot be established, by a majority vote of the full Board in which any director who is a party may participate; or (iii) by the stockholders (except that shares held by directors who are parties to the specific proceeding may not be voted). A court of appropriate jurisdiction may also order indemnification if the court determines that a person seeking indemnification is entitled to reimbursement under subsection (b). Section 2-418 further provides that indemnification provided for by Section 2-418 shall not be deemed exclusive of any rights to which the indemnified party may be entitled; and permits a corporation to purchase and maintain insurance on behalf of a director, officer, employee or agent of the corporation against any liability asserted against or incurred by such person in any such capacity or arising out of such person's status as such whether or not the corporation would have the power to indemnify such person against such liabilities under Section 2-418. Insofar as indemnification for liability arising under the Securities Act of 1933, as amended (the "Act") may be permitted to directors, officers and controlling persons of the Registrant pursuant to the foregoing provisions, or otherwise, the Registrant has been advised that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the Registrant of expenses incurred or paid by a director, officer or controlling person in connection with the securities being registered), the Registrant undertakes that it will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the questions whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. Item 25. Business and Other Connections of Investment Adviser Hartford Investment Financial Services, LLC serves as investment adviser to the funds included in this Registration Statement.
Position with Hartford Investment Name Financial Services, LLC Other Business ---- ----------------------- -------------- Thomas M. Marra President and Chief Executive Officer President and Chief Operating Officer of Hartford and Manager Life, Inc. ("HL, Inc. ")(1) John C. Walters Executive Vice President and Manager Executive Vice President of Hartford Life Insurance Company ("HLIC") (2) Walter E. Watkins, Jr. Chief Compliance Officer Chief Compliance Officer of HL Investment Advisors, LLC(3) David N. Levenson Senior Vice President Senior Vice President of HLIC David M. Znamierowski Senior Vice President-Investments and President of Hartford Investment Management Manager Company ("Hartford Investment Management") (4) David A. Carlson Senior Vice President and Deputy Chief Senior Vice President and Deputy Chief Financial Financial Officer Officer of HL, Inc. William H. Davison, Jr. Senior Vice President Managing Director of Hartford Investment Management Christopher Hanlon Senior Vice President Senior Vice President of Hartford Investment Management Tamara L. Fagely Controller Vice President of Hartford Administrative Services Company ("HASCO")(5) Kevin J. Carr Vice President and Assistant Secretary Assistant General Counsel of The Hartford Financial Services Group, Inc. ("The Hartford")(6) Mary Jane Fortin Vice President Senior Vice President of HL Inc. Robert W. Beltz, Jr. Assistant Vice President Vice President, Securities Operations John N. Giamalis Treasurer Vice President and Treasurer of HL Inc. Todd G. Picken Assistant Treasurer Assistant Treasurer of HLIC Dawn M. Cormier Assistant Secretary Assistant Secretary of HL Inc. Sarah J. Harding Assistant Secretary Assistant Secretary of HLIC Diane E. Tatelman Assistant Secretary Assistant Secretary of HL Inc.
1 The principal business address for HL, Inc. is 200 Hopmeadow Street, Simsbury, CT 06089. 2 The principal business address for HLIC is 200 Hopmeadow Street, Simsbury, CT 06089. 3 The principal business address for HL Investment Advisors, LLC is 200 Hopmeadow Street, Simsbury, CT 06089. 4 The principal business address for Hartford Investment Management is 55 Farmington Avenue, Hartford, CT 06105. 5 The principal business address for HASCO is 500 Bielenberg Drive, Woodbury, MN 55125. 6 The principal business address for The Hartford is Hartford Plaza, Hartford, CT 06115. Item 26. Principal Underwriters Hartford Investment Financial Services, LLC ("HIFSCO") is an indirect wholly owned subsidiary of The Hartford Financial Services Group, Inc. HIFSCO is also the principal underwriter for The Hartford Mutual Funds II, Inc. The directors and principal officers of HIFSCO and their position with the Registrant are set forth below:
Position and Offices with Name and Principal Business Address Positions and Offices with Underwriter Registrant ----------------------------------- -------------------------------------- ---------- Thomas M. Marra(1) President and Chief Executive Officer and Chairman of the Board and Director Manager John C. Walters(1) Executive Vice President and Manager Vice President Walter E. Watkins, Jr.(1) Chief Compliance Officer None David N. Levenson(1) Senior Vice President Vice President David M. Znamierowski(2) Senior Vice President-Investments and Manager President and Director William H. Davison, Jr.(2) Senior Vice President Vice President David A. Carlson(1) Senior Vice President and Deputy Chief Financial Officer None Christopher Hanlon(2) Senior Vice President None Mary Jane Fortin(1) Vice President Vice President Tamara L. Fagely(1) Controller Vice President, Controller and Treasurer John N. Giamalis(3) Treasurer None Todd G. Picken(3) Assistant Treasurer None Kevin J. Carr(2) Vice President and Assistant Secretary Vice President and Secretary Robert W. Beltz, Jr.(4) Assistant Vice President Vice President Dawn Marie Cormier(1) Assistant Secretary None Sarah J. Harding(1) Assistant Secretary None Diane E. Tatelman(1) Assistant Secretary None
1 The principal business address is 200 Hopmeadow Street, Simsbury, CT 06089. 2 The principal business address is 55 Farmington Avenue, Hartford, CT 06105. 3 The principal business address is 690 Asylum Avenue, Hartford, CT 06115. 4 The principal business address is 500 Bielenberg Drive, Woodbury, MN 55125. Item 27. Location of Accounts and Records Books or other documents required to be maintained by the Registrant by Section 31(a) of the Investment Company Act of 1940 and the rules promulgated thereunder are maintained by the Registrant's custodian, State Street Bank and Trust Company, 225 Franklin Street, Boston, MA 02110 and the Registrant's transfer agent, Hartford Administrative Services Company, 500 Bielenberg Drive, Woodbury, Minnesota 55125. Registrant's financial ledgers and other corporate records are maintained at its offices at the Hartford Life Insurance Companies, 200 Hopmeadow Street, Simsbury, CT 06089. Item 28. Management Services Not Applicable Item 29. Undertakings Not Applicable SIGNATURES Pursuant to the requirements of the Securities Act of 1933 and the Investment Company Act of 1940, the Registrant has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Hartford, State of Connecticut, on the 15th day of October, 2004. THE HARTFORD MUTUAL FUNDS, INC. By: * ------------------------------------- David M. Znamierowski Its: President Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the date indicated.
SIGNATURE TITLE DATE --------- ----- ---- * President October 15, 2004 ------------------------------------ (Chief Executive Officer) David M. Znamierowski & Director * Controller & Treasurer October 15, 2004 ------------------------------------ (Chief Accounting Officer & Tamara L. Fagely Chief Financial Officer) * Director October 15, 2004 ------------------------------------ Lynn S. Birdsong * Director October 15, 2004 ------------------------------------ Winifred E. Coleman * Chairman of the Board October 15, 2004 ------------------------------------ and Director Robert M. Gavin, Jr. * Director October 15, 2004 ------------------------------------- Duane E. Hill
* Director October 15, 2004 ------------------------------------ Thomas M. Marra * Director October 15, 2004 ------------------------------------ Phillip O. Peterson * Director October 15, 2004 ------------------------------------- Millard H. Pryor, Jr. * Director October 15, 2004 ------------------------------------ Lowndes A. Smith /s/ Kevin J. Carr October 15, 2004 ------------------------------------ * By Kevin J. Carr Attorney-in-fact